SEJONG, July 8 (Yonhap) — South Korea’s consumption recovered slightly thanks to emergency cash handouts, but exports remained sluggish as the coronavirus pandemic continued to ravage demand, a state-run think tank said Wednesday.
“The slowdown in Korea’s consumption has decelerated, but economic activity remains sluggish due to falling external demand on the global spread of COVID-19,” the Korea Development Institute (KDI) said in its English-language Monthly Economic Trends publication.
The nation’s overall industrial production fell 1.2 percent on-month in May, following a 2.8 percent on-month plunge in April.
However, retail sales rose 4.6 percent in May from a month earlier, after the government provided emergency cash handouts to all households to revive consumption.
“Owing to the national emergency relief fund and ‘daily quarantine’ scheme, consumption has recovered slightly and facilities investment is maintaining growth, pointing to less contraction in domestic demand,” the KDI said.
South Korea’s exports fell 10.9 percent in June, marking the fourth consecutive month of decline amid the fallout from the new coronavirus pandemic.
Outbound shipments came to US$39.2 billion last month, compared with $44 billion posted a year earlier.
“Exports continue to slide by a large margin due to falling external demand,” the KDI said. “June’s exports per workday posted huge losses, continuing last month’s trend, led by automobiles and petroleum products.”
South Korea’s economy is expected to contract 1.2 percent this year as the coronavirus pandemic and lockdown measures ravaged global trade and consumption, according to the Organization for Economic Cooperation and Development (OECD).
The OECD forecast is bleaker than a prediction by the Bank of Korea, which forecast the Korean economy to contract 0.2 percent this year.