[Economic Outlook] Fiscal Rules to Be Announced This Week... Also Confirming Whether COVID-19 Resurgence Hits Exports

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] The government will unveil fiscal rules, which will serve as standards for fiscal soundness, this week. The impact of the resurgence of COVID-19 on exports is also expected to be confirmed with numbers.

Fiscal rules have been prepared as a soundness guideline when drafting the budget. Although the necessity has been raised for a long time, discussions were somewhat delayed due to the expanded role of fiscal policy amid the spread of COVID-19, and some opposed the timing as inappropriate. The content of the fiscal rules has included measures to keep the debt-to-GDP ratio below a certain level or to manage the total expenditure growth rate at the nominal growth rate level. The government plans to announce related standards soon after discussions with the political circles.

On the 6th, Statistics Korea will release the consumer price trends for September. The impact of strengthened social distancing measures, following the sharp increase in COVID-19 cases since mid-August, on prices is expected to be confirmed. The government implemented social distancing level 2.5 in the metropolitan area from August 30 to September 13, and thereafter level 2 nationwide.

The Bank of Korea will release the 'August Balance of Payments (provisional)' results on the 8th. In July, the current account surplus increased to $7.45 billion (approximately 8.8655 trillion won), the largest surplus in nine months since October 2019 ($7.83 billion).

However, the recent surplus is considered a so-called 'recession-type' surplus due to reduced imports and overseas travel caused by the COVID-19 impact. It is difficult to interpret this only positively. Attention is focused on whether this trend continued in August or if the current account turned to a deficit due to export damage from the COVID-19 resurgence.

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