South Korea unveils US$29 billion stimulus budget

South Korean’s total stimulus package for COVID-19 has now reached the 270 trillion won mark (USD$221.8 billion) after the release of a third supplementary budget this year.

The 35.3 trillion won ($28.8 billion) budget will put into place support measures equivalent to about 14% of South Korea’s GDP, and is geared towards supporting the government’s 10.1 trillion ($8.19 billion) emergency job ad that will be used in mitigating job losses.

The emergency job aid aims to create 550,000 jobs, with hiring stepped up at organisations and facilities in the public sector. To help businesses keep jobs, the government will also expand a portion of jobless benefits for furloughed workers.

Support will also be prioritised for seven key industries that employ large numbers of workers. These include airline, automobile, shipbuilding, maritime shipping, machinery, power and communications.

Companies in these industries will be eligible for direct loans extended by government-backed lenders such as the Korea Development Bank and the Export-Import Bank of Korea.

Relief will also include syndicated loans with private-sector lenders, providing fresh capital in exchange for new shares, and investments through a special-purpose fund.

South Korea had earlier reduced its economic growth forecast this year to 0.1% from 2.4%, which will make it the worst growth since the 1998 Asian financial crisis. For the first three months of 2020, South Korea’s economy contracted 1.4%, a largest drop since 2008.

The country also experienced its biggest month of job losses in more than two decades, when jobs fell 476,000 in April from 2019, driven by layoffs in sectors such as hotels and restaurants.