New COVID-19 Cases Remain in the 300s for Five Consecutive Days... Concerns Over Reduced Consumer Spending

Possibility of Raising Social Distancing to Level 2
Potential Suspension of Government Consumption Coupons and Other Policies

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] As the number of new confirmed cases of the novel coronavirus infection (COVID-19) remains in the 300s for the fifth consecutive day, concerns are rising that consumption will shrink, making a domestic demand shock inevitable. There is also a possibility that the economy, which had raised expectations by growing 1.9% in the third quarter compared to the previous quarter, could suddenly falter. If the third wave of COVID-19 leads to an escalation in social distancing levels, the government may also suspend consumption stimulus measures such as consumption coupons.

On the 22nd, the Central Disease Control Headquarters announced that 330 new confirmed cases were added, bringing the total to 30,733. Although this is a decrease from the previous day (386 cases), considering that the number of tests dropped by more than 10,000 compared to weekdays due to the weekend effect, concerns about the spread of COVID-19 are increasing. Accordingly, the government is reviewing plans to raise the social distancing level in the metropolitan area and Gangwon Province, where confirmed cases are surging, from the current level 1.5 to level 2.

Current quarantine guidelines stipulate that after one week of level 1.5 measures in the epidemic area, the level will be raised to level 2 if ▲ the number of confirmed cases is more than twice the level 1.5 standard ▲ level 1.5 epidemic persists for more than one week in two or more regions ▲ the nationwide daily confirmed cases exceed 300 for more than one week. This suggests that the upgrade to level 2 is likely to become visible soon.

If social distancing level 2 is implemented, cafes will be restricted to all-day operations, restaurants will only be allowed takeout and delivery after 9 p.m., and karaoke rooms and indoor sports facilities will not be allowed to operate after 9 p.m. In addition to business restrictions and bans due to distancing measures, psychological anxiety among the public is also expected to impact the economy by causing economic contraction.

If social distancing is raised to level 2, the government is also expected to review whether to suspend the eight major consumption coupons currently in operation to revive the domestic economy. A government official said, "If social distancing is raised to level 2, related ministries including the quarantine authorities, Ministry of Strategy and Finance, Ministry of Culture, Sports and Tourism (which implements the coupons), and Ministry of Agriculture will go through a process to review the continuation of the consumption coupon policy."

However, the fortunate point is that the public has not completely reduced consumption despite the COVID-19 situation, similar to earlier this year, so the impact may not be as severe as expected.

The National Assembly Budget Office stated in its report titled "Status and Implications of Overseas Lockdown Policies Due to the Resurgence of COVID-19" that after surveying the Group of Twenty (G20) countries, "Unlike the early stages of the COVID-19 spread, even if lockdown policies are strengthened, the correlation with a decrease in retail sales is weakening." The office added, "This can be understood as a result of improved responsiveness of each country's economic system, such as the establishment of online non-face-to-face consumption networks."

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