The South Korean economy in 2020 contracted for the first time since the aftermath of the Asian Financial Crisis more than two decades ago.
According to the Bank of Korea on Thursday, the country's real GDP in 2020 contracted by one percent on-year, unchanged from the January estimate.
This is the lowest figure since 1998 when it posted a negative growth of five.one percent.
It is also only the third time in history that the country's economy contracted. It previously shrunk in 1980 during the oil shock and in 1998 amid the Asian Financial Crisis.
"This economic crisis that we are experiencing due to the COVID-19 pandemic has caused GDP growth to fall by one percent last year from two percent in 2019. But it is expected to turn to positive growth of 3 percent, so the amount of contraction is not as bad compared to previous crises."
One of the main drivers of the contraction was decreased private spending. Spending in the service sector, including restaurants and lodging which require face-to-face interactions, has gone down by about 5 percent on-year.
The country's per capita income also fell by one.one percent in 2020 compared to the previous year.
It has now fallen for two consecutive years.
The central bank attributed the fall to the appreciation of the greenback and contraction of the economy.
There are signs of improvement though, as the country's economy in the fourth quarter of 2020 grew by an estimated one.two percent compared to the previous quarter.
The central bank said this was largely due to exports increasing by five.four percent on-quarter led by semiconductors and chemical products.
Finance Minister Hong Nam-ki on Thursday posted on his social media that although the economy could not avoid negative growth, it is forecast to become the world's 10th biggest economy, moving up two places.
He added that by bolstering the recovery of exports and investments and improving domestic consumption at the same time, the government will go all out to achieve its goal of three.two percent economic growth this year.
Eum Ji-young, Arirang News.