Q2 Government Net Fundraising of 37.9 Trillion Won... Record High Ever

Household Surplus Funds Reach 64 Trillion Won... Near All-Time High
Household Income Increases Due to Government Disaster Relief Payments
Consumption Contracts Amid COVID-19 Impact

[Asia Economy Reporter Eunbyeol Kim] In the second quarter of this year, the government's net fund procurement scale set a new record high following the first quarter. This was due to increased government spending and slowed revenue as the government actively responded to the novel coronavirus infection (COVID-19).

According to the "Funds Circulation Trends in the Second Quarter" announced by the Bank of Korea on the 7th, the government's net fund procurement scale in the second quarter was 37.9 trillion won, a significant increase compared to 200 billion won in the same period last year. The government's net fund procurement scale recorded an all-time high of 26.5 trillion won in the first quarter, but it increased further in the second quarter.

The government's fund operation scale was 10.3 trillion won, down from 13.6 trillion won in the same period last year, while the fund procurement scale expanded from 13.7 trillion won to 48.1 trillion won during the same period.

Jung Gyu-chae, team leader of the Economic Statistics Bureau at the Bank of Korea, explained, "While the operation scale of financial institution deposits, equity securities, and investment funds decreased compared to the same period last year, the net issuance scale of government bonds expanded compared to the same period last year."

Households' disposable funds nearly tripled compared to the same period last year. The net fund operation scale of households and non-profit organizations in the second quarter was 64 trillion won, up from 24 trillion won in the second quarter of last year. Previously, the net fund operation scale of households and non-profit organizations recorded an all-time high of 66.8 trillion won in the first quarter.

While household income increased due to emergency disaster relief funds and other government support, new housing investment slowed, and consumption contracted due to COVID-19, resulting in increased disposable funds for households. According to Statistics Korea, the average monthly household disposable income, which was 4,038,000 won in the second quarter of last year, rose to 4,301,000 won in the second quarter of this year.

Team leader Jung explained, "Fund operations increased significantly from 44.6 trillion won to 110.1 trillion won as financial institution deposits, equity securities, and investment funds expanded sharply compared to the same period last year." Regarding fund procurement, the scale of financial institution borrowings increased from 20.7 trillion won to 46.1 trillion won during the same period.

The net fund procurement scale of non-financial corporations (general companies) in the second quarter was 29.1 trillion won, significantly expanding from 15.3 trillion won the previous year. This is the largest in 11 years since the first quarter of 2009 (34.8 trillion won). This is analyzed as a result of securing liquidity in response to COVID-19 amid deteriorating corporate profitability.

Team leader Jung stated, "The net fund procurement scale expanded compared to the same period last year due to corporate profit slowdown, increased demand for working capital, and increased investment in facility and intellectual property products."

Meanwhile, as of the end of June, the financial assets of the domestic non-financial sector recorded 8,970.9 trillion won, an increase of 450.8 trillion won compared to the end of the previous quarter. Financial liabilities increased by 177.4 trillion won to 5,986.4 trillion won. The net financial assets of the domestic non-financial sector were 2,984.5 trillion won, an increase of 273.4 trillion won compared to the end of the previous quarter, and the financial assets/financial liabilities ratio was 1.50 times.

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