US$20b for SK’s MERS-hit economy
Print Edition
THE South Korean government yesterday agreed to inject nearly US$20 billion into the flagging economy, which has been hit by the MERS virus outbreak and sluggish consumption.
The 22-trillion-won (US$19.8 billion) stimulus package was passed at a cabinet meeting, the finance ministry said.
“The extra budget will help revitalise the economy and stabilize the livelihoods of ordinary people who have been affected the most by the fallout from MERS,” Vice Finance Minister Bang Moon-Kyu was quoted as saying by Yonhap news agency.
As of yesterday morning, the virus had killed 33 people and a total of 184 cases had been confirmed. Forty-two of those remain hospitalized with 12 in critical condition, according to the health ministry.
The 22-trillion-won package includes an already-announced 15-trillion-won supplementary budget and 7 trillion won of other expenditures such as expanded investments by state companies and additional credits for exporters.
The extra expenditure is expected to raise the economic growth rate by 0.3 percentage points this year and 0.4 percentage points in 2016.
South Korea forecasts its economy will grow 3.1 percent this year and 3.5 percent next year.
Moody’s said consumer sentiment had plummeted as a result of MERS, halting the recovery in domestic demand, as the external sector continues to drag on growth.
“Our tracking model suggests GDP growth slowed to 2.6 percent year over year in the second quarter, which is lower than our 2.9 percent estimate from May,” Emily Dabbs at Moody’s Analytics Ltd said in an article this week.
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