Real GDP declined in 2020, the first fall in 22 years

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Real GDP declined in 2020, the first fall in 22 years

Cargo to be exported overseas is loaded at a dock in Busan in March. [YONHAP]

Cargo to be exported overseas is loaded at a dock in Busan in March. [YONHAP]

Korea's economy contracted in 2020, the first real decline in gross domestic product (GDP) since the Asian financial crisis, according to revised figures released by the central bank Wednesday.
 
Real GDP, which is nominal GDP adjusted for inflation, fell 0.9 percent last year. The last time the number was negative was 22 years ago, when it fell 5.1 percent.  
 
In March, the central bank reported a minus 1.0 percent for 2020’s real GDP, which has been adjusted after factoring in more data.  
 
Nominal GDP growth was 0.45 percent in 2020.  
 
The country's economy was dragged down last year by sluggish private consumption and exports. People cut down on consumption during the coronavirus pandemic. They were also less motivated to spend during strict social distancing campaigns.
 
Private consumption slumped by 5 percent last year. It is the lowest on-year growth since the minus 11.9 percent in 1998. Exports last year fell by 1.8 percent, the lowest growth logged since the minus 3.7 percent recorded in 1989.
 
What grew last year was government spending and facility investment.
 
Government spending increased by 5 percent on year. Facility investment increased by 7.1 percent as chipmakers continued to spend on plant and equipment during the downturn.
 
The country's gross national income (GNI) per capita came to $31,881 in 2020, down 1 percent. It is the second year the country's per capita income in dollar value slumped. GNI is essentially GDP plus income of residents from foreign sources.
 
Personal gross disposable income, which is the amount of money households actually have to spend or save after income taxes, increased by 2.3 percent to 20.95 million won last year. By dollar value, disposable personal income grew 1.1 percent on year to $17,756.
 
The country is rapidly recovering from last year's downturn.
 
According to data from the central bank, Korea's economy in the first quarter grew by 1.9 percent year on year. It is the first positive quarter since the first quarter of 2020.  
 
Private consumption in the first three months of this year increased by 1.2 percent on year, while facilities investment jumped by 12.4 percent on year. The central bank said consumption of cars, home appliances and clothes increased during the quarter.
 
Exports in the first quarter increased by 5.1 percent on year, boosted by growth in the export of cars and semiconductors. Imports grew by 4.1 percent. Main import items were machinery, equipment and chemical products.
 
Real GDP in the first quarter grew by 1.7 percent compared to the previous quarter.
 
Park Yang-su, director general of the economic statistics department at the central bank, said that this year's economic growth is likely to exceed 4 percent.
 
"If quarterly GDP growth can be maintained above the 0.7 percent level through the remaining quarters of the year, the yearly growth rate can easily break 4 percent," Park said during an online press briefing held Wednesday.
 
Central bank Gov. Lee Ju-yeol said after the monetary policy board meeting held last month that the bank upped this year's economic growth forecast from February's 3 percent to 4 percent as exports and private consumption have bounced back and facility investment remains strong.
 
BY KIM JEE-HEE   [kim.jeehee@joongang.co.kr]
 
 
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