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http://dx.doi.org/10.7545/ajip.2020.9.2.187

COVID-19 and the Korean Economy: When, How, and What Changes?  

Park, ChangKeun (Research Institute of Agriculture and Life Sciences, Seoul National University)
Park, JiYoung (University at Buffalo)
Publication Information
Asian Journal of Innovation and Policy / v.9, no.2, 2020 , pp. 187-206 More about this Journal
Abstract
Under the on-going evolution of the COVID-19 pandemic, estimating the economic impact of the pandemic is highly uncertain and challenging. This situation makes it difficult for policymakers, governors, and economic entities to formulate appropriate responses and decision makings. To provide useful information about the effect of the COVID-19 pandemic on the Korean economy, this study examined macroeconomic impact analysis stemming from the pandemic shocks with different scenarios for the Korean economy. Based on three scenarios using the growth rate of 2020 GDP and consumer expenditure patterns, the 2021 GDP by industry sector was forecast with two new approaches. First, the recovering process of the Korean economy from the shock was analyzed by applying a Flex-IO method. Second, a new forecasting approach combined with an IO coefficient matrix was applied to forecast the future GDP changes. The findings of this study are summarized as follows: First, the total GDP growth rate under the Pessimistic Scenario demonstrates less rebound from the shock than that of the Base Scenario. Second, agriculture, culture, and tourism-related sectors that are suffering from the severe losses of COVID-19 showed lower resilience than other different industries. Third, information and communications technology (ICT) industry maintains a stable growth trend and is expected to take the leading role for the Korean economy in the post-COVID-19 and the Industry 4.0 eras. The findings deliver that it needs to analyze how government expenditure responding the shock into the forecasting model, which can be more useful and reliable to simulate the resilience from the pandemic.
Keywords
COVID-19 and pandemic; economic impact and recovery; Flex-IO; IO-based forecasting model;
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