SEJONG, June 24 (Yonhap) — The International Monetary Fund (IMF) said Wednesday that South Korea’s economy will shrink 2.1 percent this year due to the coronavirus pandemic.

The IMF’s latest forecast represented a sharp decline from its previous predictions of 1.2 percent contraction in April and 2.2 percent growth in January.

The downward revision came as global ratings agencies said they expect South Korea to suffer the first annual contraction of its economy since 1998, when the Asian financial crisis hit the nation.

The IMF outlook also painted a bleaker picture of the global economy as the coronavirus pandemic has showed no signs of weakening.

The global economy is expected to shrink 4.9 percent this year, compared with a contraction of 3 percent in its April prediction, according to the IMF.

The rapidly spreading coronavirus pandemic is expected to cause a global recession this year as it has shut down factories and cities around the world.

Earlier this month, South Korea proposed its third extra budget plan worth 35.3 trillion won (US$29 billion) to help key industries cushion the economic blow from the coronavirus pandemic and protect jobs.

The biggest-ever extra budget will raise the total of the nation’s stimulus packages to 270 trillion won as the government has stepped up fiscal and monetary responses to the pandemic.

South Korea has pledged to maintain an aggressive fiscal policy to fight the pandemic, which will push up the debt-to-GDP ratio to 43.5 percent this year, compared with some 40 percent before the virus.

South Korea’s export-reliant economy is expected to suffer a bigger hit from the pandemic as the novel coronavirus disrupted global businesses and ravaged consumer demand.

Exports dropped for the third consecutive month in May due to the growing economic fallout from the pandemic. Outbound shipments dipped 23.7 percent to hit $34.8 billion last month, compared with $45.7 billion posted a year earlier.

The U.S. economy is expected to shrink 8 percent this year, while the Chinese economy is forecast to grow 1 percent this year, the IMF said.

Global trade is likely to fall 11.9 percent this year, the IMF said.