SEOUL (AFP) - South Korea's economic contraction will worsen in the current quarter, the central bank forecast on Tuesday (June 2), as the coronavirus outbreak hits consumer demand and economic activity even harder.
The Bank of Korea predicted the world's 12th-biggest economy will shrink at least 2.0 per cent in the April-June period over the previous three months.
It already declined 1.3 per cent quarter-on-quarter in the first three months, it said - a slight improvement from its first announcement in April of a 1.4 per cent contraction, but still the biggest drop in gross domestic product since the 2008 global financial crisis.
South Korea endured one of the worst early outbreaks of the coronavirus outside mainland China, and while it never imposed a compulsory lockdown, strict social distancing was widely observed from March until it started loosening restrictions last month.
Private consumption decreased 6.5 per cent in January-March from the previous quarter "as expenditures on goods and services both decreased", the BOK said.
The country appears to have brought its epidemic under control thanks to an extensive "trace, test and treat" programme and life is beginning to return to normal.
But the BOK forecast last week that the economy will shrink 0.2 per cent in 2020, a dramatic downgrade from its February forecast of 2.1 per cent growth, and cut interest rates to a record low.
The International Monetary Fund (IMF) has estimated the world economy will contract three per cent this year, saying it is expected to "experience its worst recession since the Great Depression" over the pandemic.
The IMF has predicted the South Korean economy will shrink 1.2 per cent this year.