[Economic Outlook] Over 6.2 Trillion Won COVID-19 Supplementary Budget to Be Proposed... Inflation Changes Also in Focus

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] The supplementary budget bill to overcome the novel coronavirus infection (COVID-19) will be unveiled this week. It is expected to exceed the expenditure budget of 6.2 trillion won during the 2015 Middle East Respiratory Syndrome (MERS) outbreak. Attention is also focused on the consumer price index and the preliminary announcement of last year's economic growth rate.

The market's greatest interest is in the COVID-19 supplementary budget, which will be revealed this week. Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki announced at a briefing on the 28th that a supplementary budget bill exceeding 6.2 trillion won will be submitted to the National Assembly within two weeks. Previously, the government prepared a first supplementary budget of 4.2 trillion won during the 2003 Severe Acute Respiratory Syndrome (SARS) outbreak, and an 11.6 trillion won supplementary budget during the 2015 MERS outbreak. The expenditure budget excluding revenue adjustments reached 6.2 trillion won.

On the 3rd, Statistics Korea will release the consumer price trends for February. The consumer price index rose by 1.5% in January, exceeding 1% for the first time in 13 months since December 2018. This increase is the largest in 14 months since November 2018 (2.0%). Since the January figure barely reflected the impact of COVID-19, this indicator will effectively confirm the price fluctuation for the first time since the outbreak.

On the same day, the Bank of Korea will announce the preliminary statistics for last year's fourth quarter and annual national income. The flash estimate released last month showed an annual growth rate of 2.0% and a fourth-quarter growth rate of 1.2% quarter-on-quarter. The preliminary figures may differ slightly from the flash estimates depending on the data used during the estimation process.

Previously, the preliminary growth rates for the first and second quarters of last year were each lowered by 0.1 percentage points compared to the flash estimates. The preliminary statistics also include the GDP deflator, which is the 'gross domestic product (GDP) price.' The GDP deflator is the ratio of nominal GDP to real GDP and represents the overall price level of the economy.

Due to the sharp decline in prices of major export items such as semiconductors, the export deflator has fallen significantly, and the GDP deflator is expected to record negative figures not only in the fourth quarter but also for the entire year.

Additionally, on the 4th, the Bank of Korea will release foreign exchange reserves statistics as of the end of February, and on the 5th, the January balance of international payments statistics will be announced.

This content was produced with the assistance of AI translation services.