Major foreign investment banks have revised down their economic growth forecasts for South Korea with the resurgence of the coronavirus slowing the country’s economic recovery, data showed Monday.

Nine forecast published by foreign investment banks as of end-September offered that Asia’s fourth-largest economy will contract at an average rate of 1.4 percent this year, down from an earlier average of 0.9 percent a month earlier, according to the Korea Center for International Finance. The list of banks includes Barclays, Bank of America Merrill Lynch, Citibank, Credit Suisse, Goldman Sachs, JP Morgan, HSBC, Nomura and UBS.

HSBC maintained a positive growth outlook of 0.3 percent until the end of August, but it slashed its forecast to minus 1.2 percent a month later. Citibank and JP Morgan also lowered their estimates to contraction of 1.8 percent and 1.5 percent, down from their earlier forecasts of minus 0.7 percent and minus 0.6 percent a month ago, respectively.

While Barclays, Goldman Sachs and Nomura slightly revised down the country’s economic growth outlooks, Bank of America Merrill Lynch, Credit Suisse and UBS maintained their negative outlooks, the data showed.

Foreign investment banks have also cut their growth forecasts for Asia’s fourth-largest economy next year, to 3.2 percent from the previous estimate of 3.5 percent.

The downgrade of Korea’s growth outlook this year came as the country strengthened social distancing rules to prevent a further spike in the number of coronavirus cases in Seoul and its satellite cities.

The growth outlooks for Korea, however, are still higher than the average forecast of minus 3.8 percent for other major economies around the globe this year. Due to the lingering COVID-19 pandemic, the US economy is predicted to shrink 3.9 percent. The eurozone and Japan are projected to contract 7.3 percent and 5.6 percent, respectively. 

By Jie Ye-eun (yeeun@heraldcorp.com)