hankyoreh

The exchange of services in emerging economies is expected to be normalized next year or later. (Hankyoreh photo archives)

Advanced economies, where COVID-19 vaccines are rapidly being rolled out, are expected to move into an economic recovery in the second quarter (Q2) of this year, but emerging economies, where vaccination has been delayed, probably won’t see an economic recovery until the end of the year.

As advanced economies concentrate on vaccinating their populations, their economic recovery will speed up in Q2, the Bank of Korea predicted in a report titled “COVID-19 Vaccine Distribution and Global Economic Recovery Trends,” which it released Sunday. Since advanced countries’ vaccination programs are generally expected to reach 70%, conferring herd immunity, by the end of the year, their economies could recover faster than expected if household savings, boosted by government disaster payments, shift to spending.

In contrast, emerging economies aren’t expected to see their recovery speed up until the end of the year, with decent growth returning next year. Those countries haven’t lined up enough vaccines and the timing of their vaccine supply has been delayed, with the result that they probably won’t reach herd immunity until the second half of 2022 or later.

South Korea and other Asian countries will likely see exports continue to increase, backed by the recovery of the global economy. That said, most countries other than China aren’t expected to return to pre-pandemic levels until the second half of next year.

The recovery in global trade is expected to be comparatively slow this year because of the delay in the normalization of trade in services. Commodity trade has already approached pre-pandemic levels, but the resumption of person-to-person exchange between countries may not be normalized until next year.

Trade in services is likely to gradually improve around the end of this year, starting with exchange between advanced economies. The exchange of services in emerging economies is expected to be normalized next year or later as people avoid traveling for the time being and as countries strictly manage immigration to prevent a resurgence of COVID-19.

By Han Gwang-deok, finance correspondent

Please direct comments or questions to [english@hani.co.kr]