[Weekly Review] "Improvement in Domestic Indicators, Slight Easing of Export and Production Slump"... Government More Optimistic About Economy Than Before

[Image source=Yonhap News]

[Asia Economy Reporter Joo Sang-don] The Ministry of Economy and Finance diagnosed on the 14th through the recent economic trends (Green Book) August issue that "the improvement trend of domestic demand-related indicators is continuing." This reflects a cautiously optimistic view on the recent economic situation.

The assessment of the economic situation has become brighter. Following the July statement that "an improvement trend in domestic demand-related indicators is appearing," the August report evaluated that "this trend is continuing, and the export and production downturn is somewhat easing." Regarding the real economy, the phrase "high uncertainty" was softened to "continued uncertainty."

Kim Young-hoon, head of the Economic Analysis Division at the Ministry of Economy and Finance, explained, "Economic judgment is based on indicators, and since major economic indicators have improved, negative expressions have been reduced," adding, "(The government) has judged the economic situation more positively than before."

◆Improvement in Economic Indicators= One basis for the economic improvement is the surprising rebound in industrial activity indicators. The three major industrial activity indicators?production (up 4.2% month-on-month), consumption (2.4%), and facility investment (5.4%)?all rebounded simultaneously in June. The consumer price index in July rose 0.3% year-on-year, marking an increase after two months of decline.

The employment situation is also showing signs of recovery. Although the number of employed persons has decreased for five consecutive months until last month, the decline narrowed from 476,000 in April to 277,000 in July. Regarding this, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki stated, "It is a fact that the employment situation has been steadily improving every month since May."

The decline in exports is also shrinking. From -25.5% year-on-year in April, it improved to -23.7% in May, -10.9% in June, and -7.0% in July.

◆Government Releases Stockpiles and Offers 20% Discounts as Cabbage and Lettuce Prices Soar= As vegetable prices such as cabbage and lettuce surged due to more than 50 days of continuous monsoon rains, the government announced agricultural product price stabilization measures on the 13th. The government plans to release up to 100 tons of stockpiles daily and contract-grown produce, and provide 20% discount coupons for leafy vegetables. The government will monitor supply-demand situations and price trends daily through the Agricultural Product Supply-Demand Stabilization Emergency Task Force (TF).

According to the Ministry of Agriculture, Food and Rural Affairs, the wholesale price of cabbage rose from 2,472 won per head in June to 4,113 won this month, an increase of 1,641 won (66.4%), and lettuce jumped from 4,739 won per kilogram to 14,170 won, up 9,431 won (199%). Compared to a year ago, these prices have increased by 84% and 17%, respectively. The ministry expects the strong price trend to continue until late August.

Accordingly, the government will release 50 to 100 tons daily of government stockpiles and stockpiles from the Nonghyup shipment control facilities as needed, depending on the supply-demand situation of cabbage and radish. Early shipment of contract-grown produce such as zucchini, cucumber, and eggplant will be promoted. Direct discount events for price stabilization will also be conducted. Nonghyup will hold special discount sales to support the sale of agricultural products damaged by heavy rain, and major supermarkets will provide 20% discount coupons for key leafy vegetables such as perilla leaves and zucchini.

◆Extension of Employment Retention Subsidy from 180 to 240 Days for Special Sectors such as Tourism and Travel= The employment retention subsidy payment period for special employment support sectors, which were hit hard by the COVID-19 pandemic, including tourism, travel, and performance industries, will be extended from the current maximum of 180 days to 240 days.

On the 10th, Lee Jae-gap, Minister of Employment and Labor, held a "Employment and Labor Crisis Response TF Meeting" and announced, "On the 20th, the Employment Policy Committee will be held to promote a plan to extend the employment retention subsidy support period for special employment support sectors by an additional 60 days from the current maximum of 180 days."

Earlier, in March and April, the Ministry of Employment and Labor designated eight industries as special employment support sectors due to the direct and sustained impact of COVID-19: travel, tourism accommodation, tourism transportation, performance, aircraft ground handling, duty-free shops, exhibitions and international conferences, and airport buses. Approximately 6,400 companies in these sectors that applied for employment retention subsidies are receiving expanded support compared to general industries.

Additionally, the ministry operates an employment retention subsidy system that pays up to 90% of wages when employers facing difficulties due to COVID-19 implement paid leave or furlough without reducing the number of workers. However, the period for receiving support per company is limited to 180 days under the Enforcement Decree of the Employment Insurance Act. The government plans to extend the subsidy payment period by 60 days for special employment support sectors, providing support for up to 240 days.

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