US Ministry of Finance “Korea Needs Stronger Fiscal Response for Full Economic Recovery”

-The U.S. Treasury Department evaluated that Korea needs continuous policy support to escape the economic shock of the novel coronavirus infection (Corona 19).

The US Treasury Department made such a diagnosis on the Korean economic situation in the’Report on Macroeconomic and Exchange Rate Policy of Major Trading Partners’ published on the 16th (local time).

The Ministry of Finance analyzed that “Korea was one of the first places outside China to suffer from Corona 19 outbreaks in early 2020.” Comprehensive public health measures taken by mid-March limited the spread of the virus without mass movement restrictions.

However, he pointed out, “Even so, the spread of Corona 19 in Europe and the US triggered remarkable volatility in the global and Korean financial markets.” He added, “It is historically large from the standpoint of Korea, but is relatively small compared to other advanced countries.” “Korea has enough financial space to support growth, with a national debt ratio of about 44% to GDP.” Diagnosed.

The Ministry of Finance said, “Before the pandemic (the global pandemic), the Korean economic growth rate was already slowing,” and analyzed that downside risks such as weakening global demand could continue to act as a burden.

The Ministry of Finance said, “Considering the size and duration of the pandemic, it is important that the authorities continue to adjust policy support measures, especially financial aid, to facilitate a full recovery.”

He added, “In view of the slowdown in growth that has been going on since before the pandemic, a stronger fiscal response (similar to other developed countries) is needed. This is especially true if growth is weakened or additional risks arise.”

In addition, he recommended comprehensive labor reform and expansion of social safety nets to reduce poverty rates for the elderly and support domestic demand, saying, “It is also necessary to take structural measures to increase the growth potential in the mid- to long-term.”

Meanwhile, the US Treasury Department maintained Korea as the’exchange rate monitored country’ in this report. A total of 10 countries, including Korea, China, Japan, Germany, and Italy, were evaluated as target countries. Vietnam and Switzerland have been designated as’exchange manipulators’.

[런던=뉴시스]