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The Korean Economy One Year After the COVID-19 Outbreak

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Abstract

The COVID-19 pandemic is estimated to have caused a decline of 3%p in Korea’s GDP growth and 7%p in private consumption growth, as well as the loss of 460,000 jobs. Compared to previous crises, the pandemic-induced economic slowdown was the nation’s second largest, following that suffered in the wake of the 1997–98 Asian financial crisis, with severe shocks to private consumption and employment. After bottoming out in the second quarter of 2020, however, the Korean economy has recovered, albeit at varying rates by sector, amid lingering weakness in the job market. While manufacturing’s output and exports have returned to pre-pandemic levels, employment, private consumption, and service output in 2021’s first quarter lagged behind. A year’s worth of time-series data has been collected since the pandemic’s outbreak. Using this data, this study assesses the coronavirus’s impact on the Korean economy and industries, the development of the ensuing effects over time, the impact’s pathways and distribution across sectors, and policy implications.

Suggested Citation

  • Kang, Duyong & Min, Seong-hwan & Park, Sung Keun, 2021. "The Korean Economy One Year After the COVID-19 Outbreak," i-KIET Issues and Analysis 21/8, Korea Institute for Industrial Economics and Trade.
    • Handle: RePEc:ris:kietia:2021_008
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    Keywords

    COVID-19; economic crisis; business cycle; Korea; manufacturing; employment; services; disaster aid; disaster relief; macroeconomics; macroeconomic policy; consumer price index; consumption; poduction; productivity;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F01 - International Economics - - General - - - Global Outlook
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P17 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Performance and Prospects

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