Asia Minute: South Korea Government Support Targets Big Business
Congress has now passed another financial aid package that includes help for small business. One country in Asia is taking a different approach — targeting several industrial sectors with companies that are much bigger.
Over the past several weeks, South Korea has put together a series of financial aid measures to help deal with the economic disruption of the COVID-19 pandemic. There have been subsidies to preserve jobs and save small businesses, assistance to help with housing costs, even government money to fund shopping coupons and gift certificates for consumers.
By some calculations, the government has so far spent or committed 7% of its gross domestic product to such programs.
The next group that will be getting government assistance includes some of the biggest corporate names in the country. The policy goal is to support five key industries that have been hit especially hard by the pandemic: cars, airlines, shipping, shipbuilding and oil refining.
The aid includes some loans, tax extensions and other breaks, and bond purchases to support liquidity.
This week, word came that first quarter GDP had its sharpest fall since the financial crisis of 2008, and the Finance Minister warned the second quarter will be worse.
Exports drive South Korea’s economy. For the first 20 days of April, they were down by nearly 27% from a year ago.
The next round of government financial support in South Korea could be announced as soon as next week.