Global investment banking giants, including Goldman Sachs, JP Morgan and Citi have raised their 2020 average growth forecasts for South Korea’s economy, a report compiled by the Korea Center for International Finance showed Friday.

The report came as the export-driven economy’s outbound shipments have been riding on a path to solid recovery. Korea’s current account surplus hit a two-year high in September as exports rebounded for the first time in seven months amid the global coronavirus outbreak, Bank of Korea data showed Thursday.

Nine IBs said South Korea’s economy would shrink by an average 1.2 percent this year, as of end-October, raising the figure by 0.2 percentage point on-month from the previous minus 1.4 percent outlook.

They also upgraded the nation’s 2021 growth forecast slightly from the previous average of 3.2 percent to 3.3 percent.

By IBs, Credit Suisse was the most generous towards the nation’s economic outlook, raising the figure by 0.7 percentage point to minus 1.2 percent, in the cited period. Barclays, JP Morgan, Citi and Goldman Sachs stood alongside Credit Suisse in upgrading the figure in a range of 0.3 percentage points to 0.6 percentage points.

BoA-Merrill Lynch, HSBC and UBS were among the nine that maintained their previous outlooks, while Japan’s Nomura Securities further slashed the outlook by 0.2 percentage points. Its forecast stood at minus 0.8 percent as of end-October, compared with the previous figure of minus 0.6 percent.

Coupled with the effects of the nation’s export recovery, analysts project the outcome of the US presidential elections to weigh on the upcoming growth forecasts.

“Based on the two candidates’ (US President Donald Trump and Democratic presidential nominee Joe Biden) economic positions, Biden’s win would work in favor for the South Korean economy as the US economy is likely to grow stronger,” a report released by Hyundai Research Institute on Monday showed.

Biden’s win would expand Korea’s exports – which accounts for some half of the nation’s economy – by 2.2 percentage points and the economy by 0.4 percentage points at tops.

Trump securing a second term and Republicans taking Senate control would be the worst case scenario for Korea’s economy, even compared with the current situation, as exports would contract by an annual average of 0.4 percentage point and the economy by 0.1 percentage point, the report noted.

Trump’s second term would lead to limited opportunities for South Korea’s energy and heavy industries, while Biden’s plans towards renewable energy, electric vehicles, semiconductors and pharmaceuticals could open up new opportunities for local firms, the think tank said.

The IBs’ growth outlook is slightly rosier than projections made by the nation’s central bank. The BOK in August forecast a 1.3 percent contraction for this year when the country was suffering from a virus resurgence. The forecast contracted further from its previous estimate of minus 0.2 percent.

The IBs have also upgraded the growth outlook for six other Asian economies.

By Jung Min-kyung (mkjung@heraldcorp.com)