Customers try makeup products displayed at the Korean cosmetics zone of the Shinsegae Duty Free store in Myeong-dong, Seoul. (Shinsegae Duty Free)
Buoyed by the progress of coronavirus vaccine development and monetary easing policies, expectations are on the rise that the global economy can get itself out of the virus crisis soon. The Asia-Pacific region is predicted to post 9 percent growth in its domestic production rate in 2021, and the robust on-year growth will be driven mainly by a strong recovery in private consumption, according to an Asian branch of investment bank Morgan Stanley on Wednesday.
“Private consumption could emerge as the key growth driver with release of excess savings and full job market recovery, while a stronger global demand and reduced risks of trade tensions would boost manufacturing capex, outweighing slower construction activity and a slightly narrower current account surplus,” said Robin Xing, chief China economist at Morgan Stanley Asia, at a conference in the morning.
The economist said the household savings rates came in at 37.2 percent from the first to third quarters this year, when the impact of the ongoing virus pandemic hit a fever pitch. The figure is much higher than 32.2 percent in the same periods of the years 2017 through 2019.
Sales of products, including office goods, cosmetics, food, vehicles and jewelry, have grown rapidly to exceed pre-COVID-19 levels and will likely remain on an upward trend next year, according to the investment bank.
Giving kudos to South Korea for its effective government-led response to contain COVID-19, Morgan Stanley forecast that the nation’s economy, with its GDP having already reached 97.5 percent of its pre-COVID-19 level in the third quarter, will enter a new Goldilocks phase next year with the nation maintaining momentum for growth. It forecast that Korea’s GDP will grow 4.2 percent on-year, compared with negative 0.9 percent this year.
Despite the rosy economic outlook, investors should keep in mind that a sudden virus resurgence or excessive inflation could pose risks for the regional economy, the investment bank said.
By Kim Young-won (email@example.com