South Korea's economy posted its worst contraction since the 2008 financial crisis, and analysts worry that the worst is yet to come. South Korea is Asia's fourth-largest economy, and it saw a decline in its economy by 1.4 percent in Q1 2020 as compared to Q4 2019, the Bank of Korea reported on Thursday. The decline was slightly better than analysts had predicted, but still devastating to the country. The economy grew by 1.3 percent as compared to Q1 2019, but the growth rate down significantly from the 2.3 percent growth that the South Korean economy enjoyed from Q4 2018 to Q4 2019.
Exports decreased 2 percent while consumer spending declined over 6 percent since Q4 2019. In the first 20 days of April, data shows that exports plummeted 27 percent from a year ago, indicating that Q1's harsh declines aren't the worst the country will see. CNN analysts expect the country's economy to shrink by 3 percent during 2020 while Reuters analysts expect to see a 0.1 percent decline in the country's GDP this year. The IMF expects a 1.2 percent contraction for the South Korean economy.
South Korea has gradually seen a reduction in social distancing restrictions in recent days, but analysts suggest that the country's gradual reopening will do little to boost the country's economy as long as its primary trading partners in Europe remain closed.
Market Movements
Oil prices rebounded overnight after plummeting in recent sessions. As of 1:09 p.m. HK/SIN, U.S. WTI futures were up 10.38 percent to $15.21 per barrel. Brent crude futures were up 9.23 percent to $22.25 per barrel. WTI for June delivery also gained some 3.8 percent per barrel.
Asian stocks were mixed on Thursday afternoon, with the gains prompted by the rise in oil prices and a positive day on Wall Street on Wednesday which saw all three benchmark indexes close broadly higher. Japan's Nikkei gained 0.91 percent while Hong Kong's Hang Seng Index advanced 0.23 percent. South Korea's Kospi saw the biggest gains of the day, heading up 1.02 percent. China's benchmark indexes both edged downward, with the Shangai Composite down 0.06 percent and the Shenzhen Composite down 0.28 percent. Australia's ASX 200, tightly bound to the Chinese market, was down 0.34 percent.
On the currency markets, the dollar gave up some of its gains, falling against both the euro and the pound. The greenback eked out some gains against the yen, edging up 0.04 percent to trade at 107.76. The dollar also eased against the Canadian dollar which was boosted by the rise in oil prices, to trade at $1.413.