South Korea: Fiscal stimulus against the COVID-19 – UOB

Ho Woei Chen, CFA, Economist at UOB Group, reviewed the recent fiscal measure by South Korea in order to fight the effects of the coronavirus outbreak in the country.

Key Quotes

“South Korea unveiled a KRW11.7 trillion (US$9.8 billion or 0.6% of GDP) supplementary budget on Wednesday targeting greater disease control efforts, support for small merchants and SMEs, consumption and employment as well as the local economies as the spread of COVID-19 in the country becomes increasingly worrying.”

“The proposed supplementary budget amount consists of KRW3.2 trillion revenue deficit and KRW8.5 trillion additional spending. South Korea plans to finance KRW1.4 trillion with surplus funds and KRW10.3 trillion through debt issuance.”

“The amount is comparable to its stimulus package during the Middle East Respiratory Syndrome (MERS) outbreak in 2015 worth KRW11.6 trillion and is around 2.3% of its central government budget this year. This would bring the consolidated fiscal deficit to -2.1% of GDP in 2020 from original budgeted -1.5% (2019: 0.3% of GDP). The supplementary budget is subjected to parliamentary approval.”