Economic growth forecasts slashed by banks

Major foreign investment banks and economic institutes have forecast Korea’s economic growth to be below 2 percent in 2020 due to the fallout of the fast-spreading novel coronavirus.

According to a recent survey by Bloomberg, five out of 42 foreign banks and economic think tanks predicted Asia’s fourth-largest economy to expand in the 1 percent range this year, hit by the Covid-19 - the official name for the new coronavirus - outbreak.

ING Group offered a growth forecast of 1.7 percent for the Korean economy, down from a 2.2 percent estimate made in December.

Oxford Economics downgraded its 2020 growth prediction for Korea to 1.8 percent from an earlier 2.2 percent forecast.

Bank of America Merrill Lynch kept its growth forecast at 1.9 percent, while Societe Generale expected the Korean economy to grow 1.9 percent.

Separately, three foreign institutions - Capital Economics, Nomura Securities and Morgan Stanley - have projected Korea’s economic growth to fall below 2 percent this year, citing the epidemic’s impact on its exports and domestic demand.

In a report released on Tuesday, Nomura cut its growth forecast to 1.8 percent from an earlier 2.1 percent outlook, and Capital Economics downgraded its prediction to 1.5 percent from 2.5 percent on Feb. 8.

Morgan Stanley forecast Korea’s economic growth could drop by 0.8 percentage point to 1.7 percentage points, depending on how the new coronavirus unfolds down the road. The global investment bank had earlier projected the Korean economy to expand 2.1 percent this year.

Foreign institutions’ gloomier forecasts come as the novel coronavirus has started to make a dent in Korea’s exports and domestic demand.

Korea’s average daily exports declined 9.3 percent in the first 20 days of this month.

Yonhap