South Korea Pledges USD14.7B to Revive Economy
(MENAFN) On Thursday, South Korea's President Lee Jae-myung’s administration introduced a supplementary budget totaling 20.2 trillion won (approximately 14.7 billion USD) aimed at reviving the nation’s economy, which has been weakened by U.S. tariff measures and declining domestic consumption.
Since assuming office in June, President Lee led a cabinet session that approved the additional budget plan, which is set to be presented to the National Assembly, dominated by the Democratic Party, early next week for formal endorsement.
Facing a bleak economic forecast, Lee pushed for an aggressive fiscal expansion. The country’s central bank reduced its annual growth projection by 0.7 percentage points to just 0.8 percent in May, compared to the estimate from three months prior.
Adjusted for seasonal fluctuations and inflation, South Korea’s real GDP shrank by 0.2 percent in the first quarter compared to the previous quarter, reversing the slight 0.1 percent growth seen in the third and fourth quarters of the prior year.
In the same quarter, private spending decreased by 0.1 percent, and construction investments plunged 3.1 percent, marking a continuous decline over four consecutive quarters.
To support the economy, the central bank has cut its key interest rate by 25 basis points twice this year—in February and May—bringing the rate down to 2.50 percent. These reductions followed similar cuts of 25 basis points in October and November last year.
The proposed budget allocates 10.3 trillion won (around 7.5 billion USD) for a cash relief initiative that distributes payments based on income levels.
For example, the top 10 percent of earners—about 5.12 million individuals—will receive 150,000 won (110 USD), while the remaining 42.96 million people will be given 250,000 won (180 USD).
Those in the second-lowest income group, totaling 380,000 people, will be granted 400,000 won (290 USD). Additionally, recipients of the basic livelihood security program, numbering 2.71 million, will receive 500,000 won (360 USD).
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