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New Year's Prospects for the Korean Economy (2021)

Author

Listed:
  • Chang, Jisang

    (Korea Institute for Industrial Economics and Trade)

Abstract

The year 2020 was one of considerable hardship. Korea witnessed its first instance of negative growth since the 1997 Asian financial crisis, with sharp decreases in consumption and exports due to the COVID-19 pandemic. However, after the bottoming-out of major economic indices, the Korean government’s unprecedented and timely policy response and widespread public adherence to quarantine rules made it possible for the economy to rebound more quickly than expected. As a result, expectations are currently very high for Korea’s early recovery from the economic side effects of COVID-19. The year 2021 will be the year in which Korea climbs out of the valley of recession and returns to the path of recovery. Uncertainty surrounding COVID-19 is still the most concerning variable. Despite this, gradual improvements in both domestic and international consumption and the base effect of 2020 (due to negative growth) are expected to result in a 2021 growth rate of 3.2 percent. Exports are expected to return to an upward trend in the automobile, shipbuilding, and general machinery industries, while industries that maintained strong performances throughout the COVID-19 pandemic, including ICT devices, semiconductors, and rechargeable batteries, are expected to continue to do well.

Suggested Citation

  • Chang, Jisang, 2021. "New Year's Prospects for the Korean Economy (2021)," i-KIET Issues and Analysis 21/1, Korea Institute for Industrial Economics and Trade.
    • Handle: RePEc:ris:kietia:2021_001
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    More about this item

    Keywords

    Korea; COVID-19; macroeconomy; macroeconomics; business cycle; trade; exports; trade policy; export policy; export performance; manufacturing; manufacturing exports;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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