S. Korea economy recovered to 79.3% pre-COVID levels, crisis recovery index study shows

Recovery in exports as high as 163.7%, but employment is still lagging

Overlapping images of a family wearing a mask. (Yonhap News)

Tracking a range of economic indicators — including consumption, exports, employment and production — over the past year shows that the Korean economy had recovered to 79.3% of its pre-COVID-19 level by November 2020.

According to a report titled “Analysis and Implications of COVID-19 Crisis Recovery Index,” published by the Hyundai Research Institute (HRI) on Jan. 17, the crisis recovery index this past November stood at 79.3%, the highest level since the economic shock caused by the coronavirus. This means that the Korean economy has made a 79.3% recovery from the worst of the economic shock.

The HRI defines its COVID-19 crisis recovery index as the current rate of recovery from the harshest shock in the areas of consumption, exports, employment and production.

HRI analysts tracked figures for production, consumption and exports from January to November 2020 and for employment from January to December 2020. The raw data are taken from figures for retail sales, export shipping, employed individuals, and industrial output, all maintained by Statistics Korea.

Analysts reported a faster recovery in exports than consumption, and in the manufacturing sector than the service sector. As of November, the crisis recovery index in exports stood at 163.7%, which means that exports are even stronger than they were before the pandemic, with 63.7% surplus growth following a full recovery from the shock of the coronavirus.

Recovery in exports without IT is only 80.4%, consumption only at 74.1%

But when the IT industry is excluded from the equation, the crisis recovery index for exports was only at 80.4%, reflecting severe polarization in the export economy, while consumption only had a 74.1% recovery rate.

Among production sectors, manufacturing had nearly returned to pre-COVID-19 levels, with a crisis recovery index of 99.3%. But the service sector has been slower to recover, at 77.9%.

“In terms of trends, the manufacturing sector showed clear signs of recovery from the output shock from May until September, but the pace of recovery has stagnated since then. In the service sector, there has been a definite recovery trend since March, but the pace of that recovery has been very slow,” the HRI said.

The recovery has been weakest in the area of employment, where the index stood at 22.5% as of December. “The employment area has been relatively slow to recover because employment indicators tend to lag beyond the economy and also because the pandemic’s shock on employment was concentrated in labor-intensive industries [such as wholesale, retail, food and beverage, and educational services],” the HRI said.

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