Einar H. Dyvik
Research expert covering Nordics and global data for society, economy, and politics
Economic impact of the coronavirus (COVID-19) in South Korea - statistics & facts
With its highly effective containment strategy, South Korea has been considered a model in combating the coronavirus (COVID-19) pandemic. The country never imposed a full lockdown, relying instead on aggressive testing and contact tracing, mask-wearing, and further preventive measures to control the spread of COVID-19. The virus dealt a severe blow to the global economy, and South Korea was no exception. Nevertheless, the South Korean economy fared better than the world's other major economies due to the country's comprehensive crisis management. After contracting 0.85 percent in 2020, South Korea's gross domestic product (GDP) quickly recovered and grew four percent in 2021, reaching an 11-year high on the back of strong exports and private consumption.
While these indicators improved somewhat over the course of the pandemic, the rapid recovery of Asia's fourth-largest economy was largely due to strong export performance since the end of 2020. In May 2021, South Korea's exports posted their strongest growth in 32 years, surging by 45.6 percent year-on-year. This growth was driven primarily by the information and communications technology (ICT) sector, with the export volume of semiconductors reaching an all-time high in 2021.
Macroeconomic developments: How has COVID-19 affected South Korea’s economy?
In its early stages, private consumption and the labor market were heavily affected by the pandemic. Contact restrictions and social distancing measures dampened private consumption, with real household spending declining, particularly in the areas of transportation, accommodation, and cultural activities. This was followed by a sharp drop in demand in the service sector, most notably in the hospitality, travel, and logistics industries. The unemployment rate rose to four percent in 2020, with young people hit the hardest. Youth unemployment jumped to nine percent in 2020, while the extended unemployment rate, which includes underemployed youth not covered by the unemployment rate, was nearly three times higher.While these indicators improved somewhat over the course of the pandemic, the rapid recovery of Asia's fourth-largest economy was largely due to strong export performance since the end of 2020. In May 2021, South Korea's exports posted their strongest growth in 32 years, surging by 45.6 percent year-on-year. This growth was driven primarily by the information and communications technology (ICT) sector, with the export volume of semiconductors reaching an all-time high in 2021.
Structural challenges and vulnerabilities
Although South Korea has been able to restore its economy to pre-pandemic levels as early as 2021, the pandemic has exposed or even exacerbated structural vulnerabilities in several areas that could pose socioeconomic challenges. For example, young people, women, and temporary workers have been hit particularly hard by the recession and the decline in employment. According to a survey conducted in 2021, about 33.3 percent of non-regular workers reported losing their jobs as a result of the pandemic, compared to only about eight percent of regular workers. People with lower incomes were also more affected by the pandemic than people with higher incomes. Addressing these economic and social challenges is therefore seen as another task for South Korea, not only to overcome the crisis in the short term, but also to strengthen the economy's resilience in the long term.
