Having avoided a lock-down, the Korean economy is likely to weather the corona crisis much better than its peers in the OECD countries. According to the OECD Economic Outlook published June, OECD economies are on average forecast to shrink by 9.3% year on year in 2020. The damage to the Korean economy is expected to be much smaller, only 2.5% shrinkage. Other than having avoided the lock-down, we see a number of factors contributing to the resilience. Korean financial system and its currency remains stable, unlike as in the 2 large crisis the Korean economy encountered, the Asian financial crisis in 1998 and the Lehman shock crisis in 2009. Even in exports, where it would have been quite natural to expect a disaster as the global demand for cars and TV screens go down, we see some sign of resilience. Exports of bio-healthcare has been growing rapidly, up 60% year on year as in May. While the quantity of healthcare related exports are still much smaller than Korea's traditional exports, electronics machinery and vehicles. We may be seeing a birth of a new star industry in Korea. Financial results for listed Korean companies in Q2 2020 are also expected to improve significantly compared to Q1 with chip makers driving up the rebound. Demand for Korean electronics and medical equipment has also helped airlines to stay afloat with an increase in cargo air traffic. The biggest of them, Korean Air, now expects to see profit in Q2 2020.
What has changed in the Korean financial system that led to a different outcome in the current crisis? Could the healthcare exports grow rapidly enough and could it be large enough to compensate for the inevitable sluck in car exports?
Join as we discuss the opportunities for Korean economy and business on July 21 at 8:30am-9:30am.
For participants in Seoul we would like to deliver a complimentary breakfast from Four Seasons Hotel as an option for you so that we can share our meals while having this discussion. If you'd like to accept our breakfast delivery offer, please make sure to fill in the address field of the registration form.