South Korea will take the smallest hit to growth of any advanced economy this year after it was able to limit the spread of the coronavirus without imposing severe lockdowns.
That's according to a forecast by the Organization for Economic Cooperation and Development which raised the GDP outlook for Asia's fourth-largest economy to negative point-eight percent in 2020 from the 1.2 percent downturn forecast in June.
That's considerably milder than the OECD average of 7.5 percent contraction for the year and far outperforms the 7.3 percent and 6-percent shrinkage seen for the U.S. and Japan, respectively.
How optimistic is the forecast? Can South Korea be reassured with the projection?
It's the topic of our News In-depth. Joining us live in the studio is Song Sooyoung, Professor of Finance at Chung Ang University and later in the show we link up with Christophe Andre, Senior Economist at OECD in Paris.
Professor Song, welcome to the show.
First off, what are your overall thoughts on the OECD report? Is the South Korean economy doing better than all other economies in the world?
How does this compare with other major economies such as the U.S. and Japan?
China's recovery, however, has been rather steady with its GDP growth returning with an increase of 3.2 percent on year in the second quarter with improvements in both industry and services.
China is South Korea's largest trading partner. Can we expect China's recovery to impact South Korea's recovery?
Let's try getting the perspective from the authors of the very report. We go live to the Organization for Economic Cooperation and Development.
Christophe Andre, Senior Economist in charge of Korea, joins us via Skype.
Christophe, thanks for joining us.
The global economy is still gripped with uncertainy, with precaution of a COVID-19 respread, but has found some stability amidst the chaos where the OECD has been able to raise South Korea's economic growth prospect for this year to negative point-8 percent.
This is the highest projection among the 37 OECD member states.
Taking into consideration the slowdown of the global economy that's restricted exports, how was this revised positive outlook of the South Korean economy projected?
South Korea is a heavily export reliant economy. South Korea's exports were down almost 24 percent year-on-year in the first ten days of this month. How does this impact Korea's economy?
While the number of new COVID-19 cases in South Korea have not reached zero yet, we do have the spread of the virus controlled to some extent.
We are currently reaching the end of summer vacation season, where though restricted, people have been traveling domestically, and this upcoming Monday has been designated a temporary national holiday to boost sales.
Are these factors contributing to the positive outlook of South Korea's projected economic growth?
The OECD cited South Korea’s stable control of COVID-19 as a reason to raise its projected economic growth rate.
However, amidst global efforts in a race to develop a vaccine for COVID-19, IF there is a second wave, a re-spread, of COVID-19, would that take all OECD projections back to uncertainty, or would it - to a certain extent - be parallel to the recovery of the last 6 months?
The OECD has also raised concern of aging as one of the most worrying trends for South Korea’s fiscal health, warning that the number of persons aged 65 or over is projected to exceed 80 percent of the working-age population by 2060, the highest ratio in the OECD.
What measures can the government implement to hurt the South Korean fiscal sustainability less?
Christophe Andre, Senior Economist in charge of Korea at the OECD live for us in Paris.
Many thanks for sharing your insights with us tonight. We appreciate it.
The number of people employed in Korea has fallen for a fifth straight month year on year, but the decline in July was smaller than in June. Is this a reflection that the economy is indeed on path to improvement?
What are some key factors that will determine South Korea's economic growth for the remainder of this year and early next year?
What's your forecast for the global economy for this year?
Song Sooyoung, Professor of Finance at Chung Ang University, many thanks for your insights this evening. We appreciate it.