President Moon Jae-in quickly congratulated President-elect Joe Biden last week following his projected victory over Donald Trump in the 2020 General Election. In his November
Korean Economy Shows Signs of a Rebound
Korea’s rebound from the economic impact of COVID-19 is well on its way with a jump in factory production in June and July. Rising more than seven percent in June, seasonally adjusted month-over-month, it marked the fastest rate of increase in over 11 years and reversed the steep declines that were seen the previous month for the fastest growth since 2009.
The production spike was primarily attributed to a strong showing in the nation’s leading export, semiconductors, which climbed nearly four percent from May. Meanwhile, automobile production surged nearly 30 percent while electric devices climbed nearly 14 percent from May.
The new reports “showed more clear signs of improvement in the economy and strengthens the possibility of an economic recovery in the third quarter,” vice finance minister Kim Yong-beom announced.
While the production boost suggests that Korea has begun to climb out of the economic downturn brought out by the global pandemic, economists caution that it will be a long battle to overcome the impact of the virus. Given Korea’s dependence on global trade for its economic growth, the worldwide decline in demand due to the pandemic will exist for some time.
While factory activity shrank a bit in July, it shrank at a slower pace than previous months, pointing to South Korea’s economic recovery. “July data provides early signs of a turnaround across the South Korean manufacturing sector … helped by reopening international supply chains and a gradual recovery in demand in key areas such as automotive production,” IHS Markit economist Joe Hayes told Reuters.
According to Korea Economic Institute, a new fiscal policy will help support this economic turnaround. In early July, the National Assembly approved a supplementary budget, which amounted to 35.3 trillion won, focusing on employment growth. 6.3 trillion won from this supplementary budget will go towards the Korean New Deal, aiming to make South Korea a global economic leader.
While there is much uncertainty surrounding COVID-19, the pace of South Korea’s economic turnaround is heading in the right direction.