Last Year's GDP Growth Rate -1.0%... Worst Since the 1998 Foreign Exchange Crisis (Update)

Korea Bank's "Q4 2020 and Annual Real Gross Domestic Product" on the 26th

[Asia Economy Reporter Jang Sehee] South Korea's economic growth rate last year fell by the largest margin since the foreign exchange crisis. This was due to the ongoing impact of the novel coronavirus infection (COVID-19) throughout the year.

According to the '2020 4th Quarter and Annual National Income (Preliminary)' report released by the Bank of Korea on the 26th, last year's real Gross Domestic Product (GDP) recorded -1.0%. This is the lowest since the 1998 foreign exchange crisis (-5.1%). The 4th quarter of last year recorded 1.1% growth.

By expenditure item, government consumption and facility investment turned to increase, but private consumption and exports decreased. Private consumption decreased by 1.7% as both services (food and accommodation, transportation, etc.) and goods (food products, etc.) declined. Government consumption also decreased by 0.4%, mainly due to spending on goods and health insurance benefits.

Construction investment increased by 6.5% as both building and civil engineering construction rose. Facility investment decreased by 2.1% as machinery increased but transportation equipment declined. Exports increased by 5.2%, centered on semiconductors and chemical products, while imports rose by 2.1%, mainly machinery and equipment.

Meanwhile, real Gross Domestic Income (GDI) decreased by 0.3% on an annual basis compared to the previous year. Although it recorded a negative for two consecutive years, it exceeded the real GDP growth rate due to improved terms of trade from falling oil prices.