South Korea authorizes a $23.3 billion economic stimulus package amid impending Trump tariffs
### President Lee Jae-myung Proposes Second Supplementary Budget of 2022
South Korean President Lee Jae-myung has proposed a second supplementary budget this year, totaling 40.8 trillion won (approximately $30.6 billion), following the approval of a 13.8 trillion won supplementary budget in May. This latest stimulus package is designed to further boost the country's economy, which has been experiencing weakness due to falling investment and weak consumer spending [1][2].
The key components of the package include:
1. **Consumer Demand**: The package includes 13 trillion won to stimulate consumption, primarily through universal consumer coupons. These coupons, valued between 150,000 and 500,000 won, will be distributed to enhance purchasing power and revitalize the domestic market [1][2]. 2. **Investment Promotion**: Approximately 3.9 trillion won is allocated to promote investment, aiming to improve business conditions and encourage growth [1]. 3. **Support for Small Businesses and Vulnerable Groups**: A total of 5 trillion won is dedicated to supporting small businesses and vulnerable groups, providing critical financial assistance during economic downturns [1]. 4. **Debt Relief**: The administration also plans a special debt-relief program to help at-risk debtors by potentially liquidating up to 50 million won in outstanding debt for each debtor [2].
Compared to previous budgets, this stimulus package is larger and more focused on immediate economic recovery measures. It emphasizes consumer spending and support for small businesses, which are critical for jumpstarting the economy [1][2]. The package also includes policy innovations such as "local currency" programs and a "bad bank" for managing non-performing loans, aimed at revitalizing local economies and addressing long-standing financial issues [2].
The opposition party boycotted the vote on the budget due to policy differences, but the National Assembly recently approved an adjusted budget of approximately 31.8 trillion won, reflecting an increase from the initially proposed amount [3]. This adjustment highlights the government's commitment to substantial economic stimulus measures.
The stimulus package is a part of Lee's election promises, made during his successful snap vote last month, where he pledged to boost growth [4]. The budget revision is aimed at addressing revenue shortfalls due to taxation income falling due to weak corporate performance and subdued consumer spending [5]. The stimulus package will help to address these concerns and contribute to stabilizing the economy.
- The second supplementary budget proposed by President Lee Jae-myung, worth approximately $30.6 billion, is intended to alleviate economic weakness in South Korea by boosting consumer demand, promoting investment, supporting small businesses, and providing debt relief.
- The economic stimulus package, larger than previous ones, emphasizes immediate recovery measures, focusing on consumer spending, small business support, and innovative policies such as local currency programs and a bad bank for managing non-performing loans.
- The budget approval process has been politically charged, with the opposition party boycotting the vote, but the National Assembly has approved an adjusted budget of approximately $23.6 billion, reflecting the government's commitment to substantial economic stimulus measures in line with President Lee's election promises.
