Korea skyline

Korea Politics April 2020

Korea: Government provides additional stimulus to support job retention

The recent slack in the labor market brought on by containment measures prompted the government to unleash another round of fiscal stimulus, worth roughly KRW 85 trillion (USD 70 billion). This brings the total fiscal stimulus measures to around KRW 235.6 trillion (USD 194 billion)—approximately 12.0% of GDP—and will likely result in the first fiscal deficit since the height of the financial crisis.

On 22 April, the government unveiled a wage subsidy program for people out of work worth KRW 10.1 trillion (USD 8.2 billion) to counter the impact of containment measures on the labor market. The program will benefit roughly 2.9 million people and includes wage subsidies for small businesses, emergency relief for unemployed workers, job creation and job training programs. The majority of spending will need the approval from the National Assembly, but KRW 0.8 trillion will be spent immediately using government funds.

Moreover, the government also plans to inject over KRW 75 trillion (USD 61 billion) into cash-strapped businesses. Roughly half of the funds will go towards purchasing corporate debt and bonds, while the rest will go directly to businesses in industries hurt the most from the pandemic.

Meanwhile, in the political arena, the Democratic Party of Korea (DPK), headed by President Moon Jae-in, won a comfortable majority in National Assembly elections held on 15 April, clinching 180 seats out of 300. The convincing victory will likely ensure swift approval of major legislation going forward. Moreover, the Moon administration is relatively more geared towards public sector-led economic stimulus, which should benefit the economic recovery amid the coronavirus pandemic.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest