APAC Economy Suffers as Australia Signals Massive Deficits and South Korea Stretches into Recession

South Korea’s Economy

South Korea is struggling massively, the worst in over 20 years as its economy plummets the most in two decades. The plunged exports due to coronavirus pandemic lockdown are to be blamed for that. 

South Korea, which is fourth largest economy in Asia-Pacific region witnessed a shrink of 2.9% in economy in April-June time frame. Bank of Korea reported a fall of 1.3% in first quarter which led to huge strain on country’s economy, bringing South Korea to recession for first time in two decades. This is also the most drastic and fastest drop in economy since the 1998 Asian Financial crisis that had reported a fall in economy by 3.8%.

South Korea’s economy is largely dependent on trade. Second quarter saw 13.6% fall in exports, the sharpest decline since 1974 when OPEC oil crisis made a massive shuffle in world’s economic balance. International Monetary Fund (IMF) revised its growth forecast for South Korea last month with prediction of 2.1% shrink in current year. 

Australia too is signaling its rather sober economic numbers in Thursday publication. The country declared that it is undergoing its largest deficit since the World War II. Country’s treasurer Josh Frydenberg said that current deficit of approximately $A86bn (US$61.5bn) would probably grow to almost $A184bn by the next financial year. 

“These deficits reveal the real cost to the budget of protecting lives and livelihoods as result of coronavirus”, Frydenberg said. 

The continuous rise in coronavirus cases across the APAC region are the reason of additional stress in economies of countries. With loss of trade the countries are rapidly going into recession and deficit. Coming months are going to be critical in terms of loss incurred and time it is going to take to recover post pandemic. 

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