ASSESSMENTS

With Its COVID-19 Outbreak Contained, South Korea Braces for the Global Fallout

May 4, 2020 | 10:00 GMT

Pedestrians wearing face masks cross an intersection in Seoul, South Korea, on April 23, 2020. In the first quarter of 2020, South Korea's economy saw its worst performance in more than a decade as COVID-19 spread across the country.

Pedestrians wearing face masks cross an intersection in Seoul, South Korea, on April 23, 2020. In the first quarter of 2020, South Korea's economy saw its worst performance in more than a decade as COVID-19 spread across the country.

(JUNG YEON-JE/AFP via Getty Images)

Highlights

  • The second quarter of 2020 will see South Korea emerge from its COVID-19 outbreak having partly cushioned the economic fallout, but still waiting for the other shoe to drop as export demand declines in key Western markets. 
  • President Moon Jae In's progressive ruling coalition, by virtue of their newly won legislative supermajority, will be able to shape the country's economic recovery process. 
  • But Moon's broader hopes for reform, such as lowering income inequality and easing housing prices, will need to wait until the global economy restabilizes, likely in 2021 or beyond. 
  • The continued stalemate between the United States and North Korea will also dim any progress on inter-Korean outreach in the coming months. 

As his country's COVID-19 outbreak wanes, South Korean President Moon Jae In is emerging from the battle stronger than ever, though the economic challenges ahead will impede his ability to translate that success into progress on his ambitious reform agenda. In early March, South Korea's epidemic was the worst outside of China, but it has since been far surpassed by COVID-19 outbreaks elsewhere. On April 30, new domestic spread in the country hit the milestone of dropping to zero after topping 10,000 cases overall. Despite its relatively quick recovery from the virus itself, however, South Korea's economic outlook will remain grim even after the rest of the world -- and in particular, its top trade partners in North America and Europe -- join it on the other side of COVID-19. In the meantime, the need to shore up growth amid a deepening global recession will delay Moon's promised progress on economic inequality...

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