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Q3 economic growth tipped to rebound: minister

09:21 September 28, 2020

SEOUL, Sept. 28 (Yonhap) -- The South Korean economy is expected to rebound in the third quarter from a trough three months earlier, but the pace of recovery may be sharply curbed by a flare-up in virus cases, the finance minister said Monday.

Finance Minister Hong Nam-ki said the government will make all-out efforts to boost the economic growth in the fourth quarter with massive fiscal spending.

"A rebound in the economic growth is tipped to be considerably limited by the resurgence of COVID-19," Hong said in a meeting on the economy with related ministers.

The country's economy contracted 3.2 percent in the second quarter from three months earlier on faltering exports and private spending amid the pandemic.

This file photo, taken June 4, 2020, shows stacks of import-export cargo containers at South Korea's largest seaport in Busan, 450 kilometers southeast of Seoul. (Yonhap)

Policymakers anticipated a rebound in the third quarter, but the latest spike in virus cases and stricter social distancing rules are deemed to have dealt a blow to smaller businesses and dented private spending.

South Korea's daily coronavirus cases had been in the triple digits for more than a month since Aug. 14 due mainly to cases traced to a church in northern Seoul and a political rally in mid-August.

The resurgence in virus cases prompted the Bank of Korea last month to cut its 2020 economic outlook to a sharper-than-expected contraction of 1.3 percent.

Hong said the government will focus on efforts to boost exports, which account for about 50 percent of the economy, during the remainder of the year.

"The country's exports to the United States, China and the European Union made a turnaround. Extra efforts will be made to pull overseas shipments out of minus growth," the minister said.

South Korea's exports extended their slump to a sixth month in August due to the virus fallout. But the retreat was in the single digits on a recovery of shipments of chips.

Meanwhile, Hong said 197 items in 40 areas will be subject to an investment for the "New Deal fund" that will be created from government investment.

South Korea will set up a fund worth 20 trillion won (US$16.8 billion) over the next five years to promote the Korean New Deal projects that will create millions of jobs and revive the virus-ravaged economy.

The fund will consist of 3 trillion won in government investment, 4 trillion won in investment from state-run financial institutions, and 13 trillion won from private financial firms and the public.

sooyeon@yna.co.kr
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