The benchmark Korea Composite Stock Price Index (KOSPI) fell 8.99 points, or 0.40 percent, to 2,219.67 in the first 15 minutes of trading.
South Korea has joined the likes of the US, Japan, Thailand, Singapore, Germany, and other economies officially in recession as a result of the impact of COVID-19.
Gross domestic product shrank by 3.3% for three months to June from the prior quarter when it contracted 1.3%.
GDP export volumes plunged 17% from the previous quarter, while imports fell 7.4%.
Finance minister Hong Nam-Ki said during a policy meeting Thursday that the contraction exceeded projections that had been in the low to mid 2% range due to "a larger than expected foreign sector shock". South Korea's economy recorded its worst performance in more than 20 years in the second quarter, the central bank said on July 23, as the coronavirus pandemic hammered its exports.
Exports, which account for almost 40 per cent of the economy, were the biggest drag on growth, dropping by 16.6% on-quarter to mark the worst reading since 1963.
"While consumer spending should gradually recover, the threat from the virus is unlikely to fade entirely and some social distancing will probably have to remain in place", Capital Economics Asia economist Alex Holmes said.
One saving grace has been a 1.4% gain in private consumption from three months earlier, thanks to government cash handouts that boosted spending on restaurants, clothes and leisure activities.
It is a view shared by some economists.
The government has pledged $225 billion in stimulus this year to help prop up the economy and minimize the impact of the coronavirus, and last week President Moon Jae-in delivered details of an ambitious "Korean New Deal" of economic, environmental and social reforms. Due to the pandemic, export demands fell drastically for cars and petrochemicals, however, investments in factories and construction fell into contraction as well. "The base effect and (fiscal injection) from supplementary budget will improve investment", said Park Sang-hyun, an analyst at HI Investment & Securities.
For the whole of this year, analysts have said the economy could decline by a median 0.4 percent, which would be the first full-year contraction since 1998. The International Monetary Fund last month also cut its growth forecast for South Korea, predicting it would shrink 2.1 percent this year―compared with an average 8.0 percent decline for the world's advanced economies.