The Bank of Korea "Also Reflects 'COVID-19 Supplementary Budget' in Growth Rate Forecast"

The Bank of Korea Lowers This Year's Growth Forecast to 2.1%

[Asia Economy Reporter Kim Eun-byeol] The Bank of Korea stated that its growth rate forecast of 2.1% for this year reflects the contents of the government's supplementary budget (추경).

On the 27th, Lee Hwan-seok, Director of the Bank of Korea's Research Department, said at an economic outlook press briefing, "The growth rate forecast was estimated by reflecting the impact of government policies related to the novel coronavirus infection (COVID-19) on the growth rate."

Director Lee explained, "Although the scale and details of the supplementary budget have not been finalized, we understand that considerable discussions are underway. We assumed and reflected a certain amount based on past cases." He added, "If the supplementary budget is implemented in the first quarter, around March, it is likely to be executed from the second quarter. Since executing the supplementary budget in the third quarter for the fourth quarter would have less impact on the annual growth rate compared to earlier execution, we reflected this in the current forecast."

The Bank of Korea released its economic outlook based on the assumption that COVID-19 will peak in March and then show a recovery trend. It assumed a global economic growth rate of 3.0% and a global trade growth rate of 1.9%.

Jeong Gyu-il, Deputy Governor of the Bank of Korea, said, "Since the economic outlook depends heavily on whether COVID-19 spreads further, please understand that the uncertainty of this forecast is very high."

So far, the Bank of Korea expects COVID-19 to have a significant impact in the first quarter. This is why the growth rate forecast for this year is estimated at 2.0% for the first half and expected to rise to 2.2% in the second half. However, it is still uncertain whether a V-shaped rebound will occur from the second quarter.