S. Korea: Global economy to show U-shaped recovery over COVID-19 outbreak

Red Cross workers preparing emergency relief kits packed with basic necessities like instant food for delivery to impoverished people experiencing difficulties amid the spread of the coronavirus at a facility of the Korean National Red Cross in Seoul, South Korea, on Friday (March 20). - AP

SEOUL: The global economy is expected to show a U-shaped recovery for the next two years as the Covid-19 outbreak may drive the world economy into a slowdown this year before bouncing back next year, South Korean Deputy Prime Minister for economic affairs Hong Nam-ki said on Friday (March 20).

Hong, also the minister of Economy and Finance, told a press briefing with foreign correspondents in Seoul that the most probable scenario could be the global economic recovery next year after suffering difficulties this year from the Covid-19 outbreak.

In the initial phase of the outbreak, the world economy had been forecast to achieve a U-shaped recovery by the end of this year, Hong said.

Since the declaration of the global pandemic, outlooks moved to the U-shaped rebound for the next two years, he noted, based on forecasts from the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD) and other economic think tanks.

"A negative growth (of the South Korean economy) cannot be ruled out for the first quarter of this year," said Hong who emphasized the government's efforts to prop up the export-driven economy with an expansionary fiscal policy.

The government unveiled 11.7 trillion won (US$9.4bil) worth of supplementary budget plan, which was passed through the parliament early this week, after having taken comprehensive steps worth 20 trillion won (US$16.1bil) since early February to support quarantine efforts and business operations.

South Korean President Moon Jae-in, who has ordered an "unprecedented" action in response to an "unprecedented" situation, chaired the first "emergency economic council" meeting on Thursday, announcing a plan to offer 50 trillion won (US$40bil) of emergency financial aid package for small businesses, microbusiness owners and the self-employed.

During the meeting, Moon stressed a need for additional measures to support people who faced job loss or income reduction over the virus outbreak, heralding another stimulus package in the next round of the emergency economic council meeting next week. - Xinhua/Asian News Network
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