January 26, 2022
SEOUL – South Korea’s economy grew at an estimated 4 percent on-year in 2021, posting the highest growth rate in 11 years despite omicron woes, central bank data showed Tuesday.
The export-reliant economy’s strong recovery in outbound shipments, stable private consumption amid the COVID-19 pandemic, the government’s eased quarantine rules and supplementary budgets drawn up to cushion the blow to the economy worked as key catalysts, Hwang Sang-pil, head of the economic statistics bureau at the Bank of Korea, said in an online briefing.
The latest figure marks the economy’s sharpest expansion since the 6.8 percent growth it posted in 2010, as well as a contrast to last year’s lackluster performance. In 2020, the economy posted its worst performance since 1998 — when the nation was reeling from the 1997 Asian financial crisis — by contracting 0.9 percent, according to the BOK’s earlier data.
Hwang told reporters that last year’s pace of recovery was noteworthy, citing the aftermath of the 2008 global financial crisis.
“Following the global financial crisis, Korea’s economy grew 0.8 percent in 2009 and 6.8 percent in 2010,” Hwang said.
“It is difficult to directly compare the current situation with previous cases as the cause of the crisis and the size of the economy is different, but we can say that the latest recovery is a noteworthy one,” he added.
The BOK also highlighted consumers adapting to the pandemic and two rounds of extra budgets worth a combined 50 trillion won ($41.6 billion) that partially funneled cash through subsidy programs.
Private consumption expanded 3.6 percent last year, compared to the previous year’s 5 percent contraction.
Facility investment grew 8.3 percent, slightly increasing compared to a 7.1 percent gain in 2020. Investment in construction posted a lackluster performance last year with minus 1.5 percent, further contracting from minus 0.4 percent the previous year.
Government spending expanded 5.5 percent last year, higher than the previous year’s 5 percent gain.
Exports rose 9.7 percent, bouncing back from a 1.8 percent contraction in 2020, driven by brisk overseas sales of semiconductors and oil-related products, despite global supply chain disruptions.
Imports also rose 8.4 percent, compared to a 3.3 percent decline registered a year earlier as purchases of crude oil increased, the data showed.
In November, the BOK forecast the economy would expand 4 percent for 2021 and 3 percent for this year.
Nodding to the recovery, Deputy Prime Minister and Finance Minister Hong Nam-ki said via Facebook that “Korea has proven itself a strong economy in the face of crisis and displayed the strongest and fastest recovery among G-20 nations through 4 percent growth in 2021.”
But at the same time, he expressed worries of lingering pandemic woes.
“The service sector that requires face-to-face interactions such as in accommodations, food and culture has yet to see sufficient recovery due to prolonged quarantine rules,” Hong said.
“The slowing growth of the US and China’s economies, prolonged global inflation and growing concerns surrounding the fastened pace of shift in monetary policies around the world has led to increased uncertainties surrounding our economy.”