South Korea’s economy slumped into a recession after contracting for a second consecutive quarter, as the global pandemic took a heavy toll on the export-reliant country.
Gross domestic product shrank by 3.3% for three months until June from the prior quarter when it contracted 1.3%, Bank of Korea data showed Thursday.
The latest reading–Korea’s worst performance since the first quarter of 1998 at the height of Asia’s financial crisis–missed the median forecast of a 2.4% on-quarter fall by economists polled by The Wall Street Journal.
Exports fell sharply on weak demand for cars and petrochemicals, and investments in construction and factories swung to contraction, the data showed.
Year-over-year, the economy contracted 2.9% in the second quarter, following a 1.4% expansion in the previous three months. The median forecast was for a 2.1% decline.
The central bank expects Korea’s economy to undershoot its earlier forecast of a 0.2% contraction for this year.
Countries are gradually reopening their economies after months of pandemic lockdowns, but fears of a fresh wave of coronavirus infections are weighing on them.