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The COVID-19 outbreak that started in mainland China has inevitably exerted further pressure on South Korea’s economy given their close economic ties. Economists at ANZ Research lay out their initial estimates on South Korea’s GDP growth in 2020.

Key quotes

“We are lowering our 2020 GDP growth forecast for South Korea to 1.9%, from 2.3% previously. The rise in local infections has added to the strain from the COVID-19 outbreak in mainland China.” 

“We envisage that the rise in local infections will result in a slump in both international and domestic tourism and also restrain discretionary spending.”

“Policymakers remain concerned about financial stability risks stemming from an environment of prolonged low rates, but with growth now likely to significantly undershoot the BoK’s 2.3% growth forecast for 2020, it will be difficult for the central bank to stay on the sidelines. We expect it to cut its policy rate by 25bps as soon as tomorrow.”