The Korea Herald


Economic uncertainty continues amid flare-up in COVID-19: finance ministry

By Yonhap

Published : Jan. 15, 2021 - 10:05

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This file photo, taken on April 17, 2020, shows monthly economic reports issued by the finance ministry, called the This file photo, taken on April 17, 2020, shows monthly economic reports issued by the finance ministry, called the "Green Book." (Yonhap)
The South Korean economy faces persistent uncertainty as a resurgence in new coronavirus cases and stricter virus curbs are hampering domestic demand, the finance ministry said Friday.

Domestic demand and the job market remained sluggish, affected by the third wave of the COVID-19 pandemic and tougher social distancing rules, according to the Ministry of Economy and Finance.

"Though the country's exports are improving, the real economy faces continued uncertainty, with domestic demand shrinking and job data pointing to slumps," the ministry said in a monthly economic report, called the "Green Book."

The country's industrial output and facility investment rose in November from a month earlier on export recovery, but consumption declined for the second straight month amid spiking coronavirus cases.

The nation's overall industrial production increased 0.7 percent in November from the previous month, while facility investment rose 3.6 percent on-month, according to the statistics agency.

But retail sales fell 0.9 percent on-month in November as people refrained from visiting offline stores amid tougher virus curbs.

On Dec. 8, the country raised its virus curbs to Level 2.5, the second highest in its five-tier scheme, in the Seoul metropolitan area, home to half of its 51.6 million population, and to Level 2 in the rest of the country.

The country's job market remained in limbo amid the protracted pandemic, reporting the largest number of job losses in 22 years in 2020.

South Korea also reported the biggest job loss in December since 1999, as the winter wave of the pandemic dealt a blow to jobs in the face-to-face service sector.

The number of employed people reached 26.5 million last month, 628,000 fewer than a year earlier and marking the 10th straight month of job losses, data showed.

"As the tougher virus curbs have been extended during the current wave, the face-to-face service segments, including those under business suspensions, reported further slumps," Kim Young-hoon, director of the ministry's economic analysis division, said at a press briefing.

Despite economic uncertainty, anticipation for an economic recovery is also growing amid global COVID-19 vaccination drives, according to the finance ministry.

"Externally, global resurgences in COVID-19 and the imposition of stricter lockdowns slowed down recovery momentum, but expectations for an economic recovery are also expanding on vaccination efforts and major countries' move to strengthen their policy response," the ministry added.

The finance ministry expected Asia's fourth-largest economy to grow 3.2 percent this year following last year's estimated contraction of 1.1 percent. (Yonhap)