Banks reduce growth forecasts for S. Korea due to social distancing

Major foreign investment banks have slashed their economic growth forecasts for South Korea from an earlier contraction average of 0.9 percent to 1.4 percent as of end-September.

The banks, which include Barclays, Goldman Sachs, JP Morgan, Citibank, Credit Suisse, Bank of America Merrill Lynch, HSBC, Nomura, and UBS, made the downgrade due to the strengthened social distancing rules in Seoul and its satellite cities, according to the Korea Center for International Finance.

Citibank and JP Morgan slashed its forecast to contractions of 1.8 percent and 1.5 percent, from an earlier minus 0.7 percent and minus 0.6 percent.
HSBC lowered its estimates to minus 1.2 percent from 0.3 percent a month ago.

While Goldman Sachs, Barclays, and Nomura slightly revised economic growth outlooks, while Bank of America Merrill Lynch, Credit Suisse, and UBS maintained their negative outlooks.

Foreign investment banks have also cut their growth forecasts for the country next year from 3.5 percent to 3.2 percent.

Nonetheless, the growth outlooks for South Korea are better than the average forecast of minus 3.8 percent for other major economies.

European countries and Japan are predicted to shrink 7.3 percent and 5.6 percent, while the US is projected to contract 3.9 percent.