K-Quarantine Crisis Shakes Economy... Deputy Prime Minister Hong: "August, Impact of 4th COVID-19 Wave Unavoidable" (Update)

The 43rd Emergency Economic Central Countermeasures Headquarters Meeting

Hong Nam-ki, Deputy Prime Minister for Economy, is speaking while presiding over the 43rd Emergency Economic Central Countermeasures Headquarters meeting held at the Government Seoul Office on the 12th.
[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Son Seon-hee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said on the 12th, "From August, the ripple effects of the 4th wave of (COVID-19) are expected to be inevitable to some extent." Despite high-intensity quarantine measures continuing for a month, the spread of COVID-19 is rather expanding, and damage to the real economy is expected to become visible.

Deputy Prime Minister Hong chaired the Emergency Economic Central Countermeasures Headquarters meeting at the Government Seoul Office in the morning and said, "Under the policy of strengthening quarantine, it is necessary to respond strictly with tension to 'minimize shock and maintain recovery momentum.'"

Hong diagnosed the recent economic situation, saying, "Economic damage is accumulating due to the 4th wave and strengthened quarantine, such as a decrease in sales in face-to-face service industries," but "the impact on real indicators is still limited, and the recovery trend is continuing with difficulty." As evidence, he cited exports increasing by 46.4% from the 1st to the 10th of this month, an increase of 542,000 employed persons last month, and a 7.9% increase in total card sales in July.

However, despite the government's high-intensity quarantine measures, which are practically close to movement restrictions, the daily number of new COVID-19 cases has far exceeded 2,200, reaching an all-time high. The highest-level quarantine measures, which were intended to be implemented "short and intense," have been prolonged, and the resulting economic damage is expected to be severe.

In addition, the export industry, which experienced a record boom in the first half of the year, is facing difficulties due to rising raw material prices and logistics problems. Regarding this, Deputy Prime Minister Hong said, "This month, we will deploy a total of 13 temporary vessels, the largest monthly scale, on routes to the Americas and Southeast Asia," and "We will provide incentives (20,000 KRW per container) to shipping companies with increased container cargo volume." Since the beginning of the year, the government has deployed 4 temporary vessels from January to April, 6 in May, 6 in June, and 9 in July, increasing the number of vessels further.

Hong also said, "In the second half of the year, we will increase the number of national cargo flights on the America route to 3,300 (3,196 in the first half), and actively support cargo transportation using passenger planes (such as converting them into cargo planes)." Along with this, the government is also promoting financial support such as emergency management stabilization loans worth 100 billion KRW and export promotion loans worth 30 billion KRW.

Regarding the recent surge in raw material prices, Hong said, "We will implement up to a 2% discount sale on non-ferrous metals and allow credit sales within a certain limit (limit of 3 billion KRW)," and "We will also establish a separate 100 billion KRW loan fund for small and medium-sized enterprises to purchase raw materials using the existing budget."

Measures to support small business owners and self-employed people struggling due to the 4th wave of COVID-19 will also be accelerated. Hong said, "Above all, rapid support is urgent," and "We will ensure that 90% of the 'Hope Recovery Fund and National Support Fund' from the 2nd supplementary budget bill is paid by the end of next month, and we will make every effort to quickly supply emergency funds worth 6 trillion KRW within this month." He added, "We will also complete review and announce tax support such as extension of comprehensive income tax and VAT payments, extension of social insurance premium deferrals, and support for deferral of utility payments within this month."

Additionally, Hong announced at the meeting that the AI-based non-face-to-face medical service 'Doctor Answer Clinic' will be introduced to eight medical institutions nationwide next year, and AI ambulances will be gradually distributed nationwide. He also stated that to strengthen the competitiveness of the aviation maintenance industry, which is highly dependent on overseas sources, the government aims to reduce overseas maintenance dependence to 'below 30%' by 2025, supporting this through airport fee reductions, exemption of tariffs on aviation parts, and reduction of maintenance costs.

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