Korea Development Institute expects Korean economy to grow just 0.2% in 2020
Updated: 2020-05-20 17:26:25 KST
The Korea Development Institute has significantly slashed its growth forecast for the Korean economy this year to almost zero.
In its report published on Wednesday, it forecast just zero.two percent growth this year.
That's two.one percent lower than its forecast in November last year, before the coronavirus outbreak.
"The cut in the economic growth forecast is mainly due to weak consumer spending and a contraction in exports amid the global pandemic."
The thinktank forecast private consumption to drop by two percent this year.
It said the damage in consumption in the service sector which requires face-to-face interaction is expected to be especially severe.
The country's exports are forecast to fall by 15.9 percent, as many countries worldwide have taken lockdown measures amid the spread of the coronavirus.
If the projections are correct, it will be the country's lowest rate of growth since the 1998 foreign exchange crisis when Korea saw the economy shrink by 5.1 percent.
One overseas expert said the actual growth rate will depend on what other countries do to deal with the pandemic.
"We find that the Korean economy which would've grown at 2.4% in 2020 without the virus, it loses 4 percent growth. So it grows at -1.6. That's on the assumption that all countries do the right thing."
An official at the KDI said if the spread of COVID-19 slows down, a growth rate of 1.1 percent can be expected but if the pandemic lasts for longer, it could result in the economy shrinking by 1.6 percent.
Eum Ji-young, Arirang News.