section_path: Impact by region or country/Asia-Pacific/Korea
section_name: Korea
paragraph_text: Korea
  
  Korea's gross domestic product (GDP) growth rate in the second quarter of 2020 fell 3.3 percent from the previous quarter. This is the second consecutive quarter of negative growth following the first quarter (−1.3 percent). It was the lowest performance in 22 years and three months since the first quarter of 1998 (−6.8 percent) after the 1997 Asian financial crisis. Experts cited exports, which account for 40 percent of the Korean economy, as the worst performance report in 57 years since 1963, as the main factor for negative growth.
  
  The employment market situation is also a big blow. According to the National Statistical Office, the number of employed people decreased by more than 350,000 in June from a year earlier due to the shock of the job market caused by the spread of COVID-19. The unemployment rate soared to the highest since 1999 when the statistics began to be compiled. In particular, the number of economically active young people decreased a lot, and the number of unemployed reached 1.66 million, up 120,000 from a year earlier.
  
  The Korean economy exhibited relatively low real GDP growth prior to the spread of the virus caused by COVID-19 (1%). The already sluggish economy led Korea to experience a contraction of its real GDP during the first half of 2020, with a decline of 1.28% in the first quarter and a contraction of 2.74% in the second quarter, indicating a recession. After reaching a trough in the second quarter, the economy began to recover, showing an expansion of 2.2% in the third quarter. The year ended with a growth of 1.6% in the fourth quarter, which remained relatively stable at 1.5% during the first quarter of 2021. Even though recessions are often accompanied by unemployment the Korean labor market showed low fluctuations during and after the recession as moderately higher levels of unemployment lagged behind economic activity. By the end of the second quarter of 2020, the unemployment rate has increase by less than a percentage point compare to October 2019 (3.5%) to 4.2%. This relatively stable trend in the labor market continued through the third and fourth quarter, with unemployment peaking at 4.8% in January 2021. Changes in the business cycle in Korea during the Covid recession reinforced the near zero inflation rates observed the last quarter of 2019, consistent with the slow economic growth at the onset of the recession. This low inflation persisted during the first quarter of 2020 and in the second quarter, the economy experienced a minor deflation, with a negative inflation rate of 0.21%, likely due to the continuous deflation in energy prices. In the first quarter of 2020, the energy inflation huber around -7.8% during the first two months, but it fell to -10.22% in May.