[Economic Outlook] Bank of Korea Announces Q2 Growth Rate... Tax Law Amendment Bill Also Released

[Sejong=Asia Economy Reporter Kwon Haeyoung] This week, the second quarter domestic gross domestic product (GDP) growth rate will be announced. The tax law amendment bill to be applied from next year will also be disclosed.

The Bank of Korea will release the preliminary real GDP for the second quarter on the 27th. It is an economic indicator that gauges the possibility of 4% growth in South Korea's economy this year and is expected to have a significant impact on the timing of the Bank of Korea's base interest rate hike.

The quarterly growth rate recorded negative growth for two consecutive quarters after the outbreak of COVID-19, with -1.3% in the first quarter and -3.2% in the second quarter of last year, followed by positive growth for three consecutive quarters: 2.1% in the third quarter, 1.2% in the fourth quarter, and 1.7% in the first quarter of this year. The Bank of Korea raised its growth forecast for this year from 3.0% to 4.0% in May. If the quarterly growth rate from the second to fourth quarters remains in the high 0.6% range, achieving an annual growth rate of 4% is possible.

The Ministry of Economy and Finance will announce the '2021 Tax Law Amendment Bill' on the 26th. Deputy Prime Minister and Minister of Economy and Finance Hong Namki previewed tax support for major core strategic technologies such as semiconductors and the extension of the allowable period for loss carryback for small and medium-sized enterprises (SMEs) at the expanded executive meeting on the 19th.

The government has designated three major sectors?semiconductors, batteries, and vaccines?as 'national strategic technologies' important from the perspective of national economic security and plans to significantly expand tax and financial support. The loss carryback for SMEs aims to improve cash flow by extending the allowable period for loss carryback.

The Statistics Korea will release the 'June Industrial Activity Trends' on the 30th. Since June was just before the fourth wave of COVID-19, it is expected that the economic improvement trend continued.

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