South Korean president Moon Jae-in has warned that the economic crisis stemming from coronavirus is only just beginning as he unveiled a sharp increase in spending to deal with the fallout of the pandemic to almost $200bn, the Financial Times reported. The new measures highlight the long-term economic challenge for countries even after they have dealt with the immediate public health crisis. “We are at the beginning stage of a crisis. A hiring freeze together with a corporate crisis is looming,” said Mr Moon.
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South Korean structured notes, favored by local retail investors, could face massive losses after European banking shares plunged more than 40% in the past month, Bloomberg News reported. At least four Korean products linked to the Euro Stoxx Banks Index are likely to record losses of more than 50% if the underlying gauge stays at around the current level until their maturity, according to terms compiled by Bloomberg. The gauge has fallen 45% since a mid-February high on disappointment over European Central Bank stimulus measures. Korea Investment & Securities Co.
Seoul-based labor lawyer Lee Seung-yeon’s phone has been ringing almost nonstop since the coronavirus hit South Korea, Bloomberg News reported. One of the calls is from an owner of a restaurant in tourist spot Myeongdong. The restaurateur is thinking of closing his business after revenue dwindled to 200,000 won ($168) a day. Others phone about trouble paying salaries or about getting government assistance. “The situation is really serious,” says Lee.
Two decades after South Korea’s swift economic response helped avert a devastating recession, the country is taking decisive steps to battle another slowdown, this one with a human cost as well, Bloomberg News reported in a commentary. The coronavirus, which has claimed more than 30 lives in South Korea and infected close to 6,000 people, lands new punches on an economy that was just beginning to find its feet after being caught in the U.S.-China trade conflict and a separate spat with Japan. Korea has more Covid-19 cases than anywhere outside China.
South Korea is taking steps to prevent households from getting hurt by the record debt they owe, and that’s prompting the issuance of a flood of top-rated won bonds to help finance the policy, Bloomberg News reported. The government is encouraging low-income home owners to tap state-backed Korea Housing Finance Corp. to refinance their loans. Borrowers can apply to shift into fixed-rate loans from floating rate so they aren’t burned if interest rates rise, and get into amortized debt whose interest and principal are paid at the same time.
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With its interest rates back at an all-time low, speculation is mounting that the Bank of Korea may be forced to join other central banks in using unconventional tools to stimulate one of the hardest-hit economies in the trade war, Bloomberg News reported. While Governor Lee Ju-yeol said last week it was too early to consider unconventional steps, he also acknowledged that the BOK was constantly reviewing and updating its “contingency plans” and studying actions previously taken by other nations should it run out of room to lower interest rates.
One of the world’s top shipbuilders is bracing for flat new order growth in the industry in 2019, as rising uncertainty stemming from the US-China trade war has caused major customers to hold back orders, the Financial Times reported.
South Korea is making a last-ditch attempt to win an exemption from US tariffs on cars and auto parts, as the country struggles to shield its export-driven economy from rising US protectionism and the fallout from Donald Trump’s trade war with China, the Financial Times reported. Yoo Myung-hee, South Korea’s trade minister, will visit Washington this week to press Seoul’s case with White House officials, members of Congress and US trade representatives, before the US president pushes through a new tariff against one of its key allies in Asia.
South Korea needs another economic overhaul like the one following the International Monetary Fund bailout in the late-1990s to stay competitive globally, according to a major global restructuring consulting firm, Bloomberg News reported. It’s as if Asia’s fourth-largest economy is being squeezed with a nutcracker, with China catching up to Korea and overtaking it in some sectors, while Japan is regaining its competitiveness as the economy recovers and it comes up with innovative technologies, said Yung Chung, Seoul-based managing director of AlixPartners LLP.
South Korea’s economy suffered its worst quarterly contraction since the global financial crisis as the export-driven economy felt the pinch from weakening growth in China, global trade tension and a downturn in the technology sector, the Financial Times reported. The 0.3 per cent fall in economy follows growth of 1 per cent in the previous quarter, undershooting expectations that gross domestic product would increase 0.3 per cent, according to economists polled by Reuters.