Tae-jun Lee, Gounee Yang

Global Economic News

REFLECTING the impact of COVID-19 pandemic, South Korea’s potential growth rate is expected to decrease to 2 percent this year and next year. It is estimated to be around 2.2 percent in 2019~2020. It is analyzed that COVID-19 pandemic impact lowered the potential growth by 0.4 percent between 2019 and 2020, and 0.2 percent between 2021 and 2022.

According to the “Re-estimation of Korea Potential Growth Rate Reflecting COVID-19” published in BOK Issue Not, the Bank of Korea (BOK) estimated the potential growth rate of South Korean economy again in consideration of COVID-19 impact, and it is estimated to be around 2 percent this year and next year.

The potential growth rate is estimated to decrease 0.2 percent due to the COVID-19 impact and 0.1 percent due to population factors.

Jung Won-seok, head of the Bank of Korea’s forecast model team, said, “It is analyzed that a decrease in labor due to a decrease in the working-age population is one of the factors in the decline of the potential growth rate while the COVID-19 impact has continued.”