48^th Meeting of Central Economic Response Headquarters

 

Government to Boost Small Business Support

 

 

Deputy Prime Minister Hong Nam-ki presided over the 48^th Meeting of the Central Economic Response Headquarters held on November 23, and discussed plans to boost support for small businesses and low-income households.  Proposals from the 3^rd population policy taskforce with regard to how to respond to local depopulation and increasing demand for elderly care, were another topics of discussion.  DPM Hong talked about the current economic situation at the beginning of his keynote address. 

 

The following is a summary of DPM Hong’s keynote address.

 

Current economic situation

 

Recovery expectations have been growing in the fourth quarter with the ‘living with Covid-19’ policy and government’s consumption-boosting payments.  Monthly credit card spending rose over 10 percent as of November 23 and the country’s composite consumer sentiment index (CCSI) showed 107.6 this month, going up for three straight months.  Exports also gained 27.6 percent for the November 1-20 period. 

 

The 3^rd quarter household income data, released last week, showed a biggest increase since data collection began in 2006 of 8.03 percent, with the fifth quintile income slowing to 5.34 percent.  The number of employed persons has been rising by over 500,000 for seven months in a row, raising expectations for recovering demand. 

 

Boost support for small businesses and low-income households

 

Despite Korea going toward the 80 percent of vaccination threshold (78.9 percent as of November 22), risks still hang of getting infected and global supply shortages may disturb small businesses that are already suffering.  Extra tax revenues worth 19 trillion won projected to come, the government will use some of the revenues to boost support for small businesses and low-income households, as well as stimulate consumption[1], making this round of support worth more than 12.7 trillion won for the following plans.

 

- 9.4 trillion won worth of low interest rate loans for those outside the business loss compensation plan

- A total of 10.8 trillion won of support to be provided, including the 9.4 trillion won loan program and 1.4 trillion won of business loss compensation payment transferred from the 3^rd quarter

- Provide an up to 200,000 won cut in electricity bills or industrial accident compensation insurance contributions

- Spend 1.3 trillion won to reinforce job seeker entitlements, expand job training support to 545,000 recipients, and spend 1.4 trillion won to raise the value of energy vouchers

- Increase vegetable farmer support by 0.4 trillion won to help keep stable food prices, and childcare- and disease prevention-related support by 0.5 trillion won

 

Boost consumption

 

- Have paid a total of 387.5 billion won of cashback rewards for October credit card use, and November rewards to be paid on December 15

- Extend the individual consumption tax cut for car purchases to June 2022

 

Proposals from 3^rd population policy taskforce

 

- Response to local depopulation:  Work to develop metropolitan cities in provinces, build special zones for working, living and cultural activities in large provincial cities

- Launch a local depopulation response fund worth 1 trillion won

- Work to improve the public healthcare and nursing care services for the elderly

- Work out for a more sustainable social insurance system, including nursing care services and national pension plan

 

Please refer to the attached pdf