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South Korea's GDP shrinks 1.3% in first quarter

South Korea's economy contracted slightly less than expected in the first quarter, when the coronavirus outbreak hit consumer demand and economic activity, revised central bank data showed Tuesday.

South Korea's GDP shrinks 1.3% in first quarter
A photo taken on May 31, 2020 shows travellers wearing face masks shopping at a store inside Jeju airport on Jeju island. AFP
The world's 12th-biggest economy shrank 1.3 percent in the January-March period over the previous three months, the Bank of Korea said.

It was a slight improvement from its first announcement in April of a 1.4-percent quarterly contraction, but still the biggest decline in gross domestic product since the 2008 global financial crisis.

South Korea endured one of the worst early outbreaks of the coronavirus outside mainland China, and while it never imposed a compulsory lockdown, strict social distancing had been widely observed since March.

Private consumption decreased 6.5 percent during the January-to-March period from the previous quarter "as expenditures on goods and services both decreased," the BOK said.

The country appears to have brought its epidemic under control thanks to an extensive "trace, test and treat" programme and life is beginning to return to normal with slightly relaxed social distancing rules.

But the BOK forecast last week that the economy will shrink 0.2 percent year-on-year in 2020, a dramatic downgrade from its February forecast of 2.1 percent growth, and cut interest rates to a record low.

The International Monetary Fund (IMF) has forecast the world economy will contract three percent this year, saying it is expected to "experience its worst recession since the Great Depression" over the pandemic.

The IMF has predicted the South Korean economy will shrink 1.2 percent in 2020.

Topics: South Korea , economy , coronavirus outbreak , GDP , International Monetary Fund
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