[Initial Timing] Don't Miss the Timing for 'Level 3 Escalation'

[Asia Economy Reporter Kwangho Lee] The daily number of new confirmed cases has surpassed 300, clearly indicating a nationwide rapid spread of the novel coronavirus infection (COVID-19). Experts warn that it is urgent to raise social distancing to level 3 to curb the spread of infection and restore daily life. In a Realmeter public opinion poll, more than half of the population, 55.9%, responded that it is necessary to strengthen social distancing to level 3.

However, while recognizing the severity of the situation, the government is taking a cautious stance. It plans to continue monitoring the pattern, scale, and speed of the spread until this week before making a decision. The government's deep concern stems from the fact that social distancing level 3 essentially imposes restrictions on social and economic activities comparable to a 'lockdown.' Since economic activities of small business owners and self-employed individuals have already been severely contracted due to COVID-19, raising social distancing to level 3 could deliver a critical blow to the economy.

Moreover, the government must promote measures to revitalize the local economy alongside quarantine measures, but the budget for this is severely insufficient. On the 24th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, expressed concerns at the National Assembly Budget and Accounts Committee, stating, "If disaster relief funds are provided in the future, we will have no choice but to rely 100% on issuing government bonds," and "From the perspective of those in charge of fiscal authorities, it is difficult to provide a second round of disaster relief funds in the form of the first round."

With three supplementary budgets totaling 59 trillion won this year, the managed fiscal balance deficit has ballooned to 111.5 trillion won, and the national debt ratio relative to gross domestic product (GDP) has soared from 38.1% last year to 43.5% this year. To provide a second round of disaster relief funds, a fourth supplementary budget must be prepared, which would require issuing deficit government bonds fully funded by debt. In other words, given the fiscal limits, there is a need to reserve fiscal capacity in case the economic situation worsens.

Nonetheless, the common view among many experts is that raising social distancing to level 3 to heighten public vigilance is necessary. This is because, considering not only the scale of daily confirmed cases but also the proportion of 'unknown' infection routes, the positivity rate relative to the number of tests, and the regional distribution of patients, the situation is quite dangerous.

Professor Woojoo Kim, an infectious disease specialist at Korea University Guro Hospital, said, "If a wound becomes infected and suppurates but you do not cut the flesh because of pain, sepsis will occur, and bacteria will spread throughout the body, making it difficult to manage." This implies that raising the level of social distancing quickly to manage and recover is more beneficial for the economy. He advises that hesitation or delaying decisions could prolong the wave.

Global economists also argue that in such situations, "aggressive measures by any means necessary" should be taken. Jason Furman, former chairman of the Council of Economic Advisers under the Barack Obama administration, mentioned, "It is better to be excessive than insufficient, and measures should be devised using existing mechanisms as much as possible." He also stated, "Do not fear overlapping support or unintended 'beneficiaries.'"

Charles Wyplosz, professor at the Graduate Institute of International and Development Studies in Geneva, emphasized, "Timing is crucial for everything," and "Now, when COVID-19 is causing a 'bottleneck' that blocks the economy, a bold decision to abandon moral hazard can save the world." Raising social distancing to level 3 is an unavoidable choice. The situation is urgent; why hesitate? We hope the government does not miss the timing.

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