SEJONG, Sept. 16 (Yonhap) — South Korea’s economy is expected to contract more than predicted this year, due to a recent resurgence of the new coronavirus, the Organization for Economic Cooperation and Development (OECD) said Wednesday.
In its latest economic projection for South Korea, the Paris-based club of major economies predicted the Korean economy will contract 1 percent in 2020 from a year earlier.
The updated prediction marked a downgrade from its August forecast of 0.8 percent, but the highest growth estimate among 37 OECD member countries.
Compared with the OECD’s June forecast, however, it marked a upgrade of 0.2 percentage point. It is also far better than the global average of 4.5 percent contraction. The second-best performer is Turkey, whose economy is projected to shrink 2.9 percent.
Comparable figures are contraction of 5.8 percent for Japan, 5.4 percent for Germany and 3.8 percent for the United States.
The OECD recommended that fiscal policy should play an active role for the global economy to recover from the pandemic.
“Fiscal policy support needs to be pursued in 2021 and recent announcements in many countries of additional fiscal measures are welcome. Monetary policy needs to remain supportive,” it said.
In the April-June period, South Korea’s economy shrank 3.3 percent from three months earlier as the pandemic hurt its exports and consumer spending.
The global economy is expected to return to a recovery track next year, but its gross domestic product is unlikely to reach its pre-crisis level in 2021, the OECD said.
“In most economies, the level of output at the end 2021 is projected to remain below that at the end of 2019,” it said.
Earlier this week, the Asian Development Bank predicted that South Korea’s economy would retreat 1 percent this year over the coronavirus pandemic.