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Business & Finance

South Korea's Q4 growth likely slowed as exports recovery tempered by virus impact

  • "The key (for the economy this year) will be the timing of easing of distancing measures, vaccine supplies and the pace of global economic recovery," he added.
22 Jan 2021

SEOUL: The South Korean economy likely grew at a slower pace in the fourth quarter as a boost in exports was partially offset by sluggish domestic demand due to toughened COVID-19 social distancing measures since late last year.

Asia's fourth-largest economy is expected to have expanded by a seasonally adjusted 0.7% in the October-December period from the previous quarter, according to a median forecast of 14 economists polled by Reuters.

Growth in the third quarter at 2.1% was the fastest quarterly pace since the third quarter of 2009.

"The economy likely extended growth despite toughened social distancing measures (in December), as a recovery in exports was seen outweighing sluggish private consumption," said Oh Chang-sob, economist at Hyundai Motor Securities.

Government data showed the country's exports surged 12.6% year-on-year in December, the sharpest expansion in 26 months.

Exports grew a total 4.2% for the December quarter, rebounding from a 3.4% decline in the previous quarter and marking the first quarterly expansion in two years.

"With the resurgence in coronavirus persisting, growth (at home) is expected to be towed by exports and facility investment for the time being," said DB Financial Investment's economist Park Sung-woo.

"The key (for the economy this year) will be the timing of easing of distancing measures, vaccine supplies and the pace of global economic recovery," he added.

On a year-on-year basis, GDP likely shrank 1.7% in the final quarter, slower than a 1.1% contraction in the September quarter.

Separately, 27 economists forecast the manufacturing-heavy economy to have shrunk 1.1% last year - the first annual contraction in 22 years - and see it rebounding 3.0% this year, in line with the central bank's latest projection.