By Yoon Ja-young
The government is considering measures to boost the economy because of MERS, including a supplementary budget, the finance minister said Monday.
"The government is thoroughly examining the damage to the economy incurred by Middle East Respiratory Syndrome (MERS)," Strategy and Finance Minister Choi Kyung-hwan told the National Assembly. "It has already damaged the economy considerably."
He said even if the MERS outbreak were contained early, the government would consider measures to prop up economic growth, including setting a supplementary budget.
The comment comes amid increasing concern that MERS is damaging the economy, which has already been suffering a loss of growth momentum.
The Korea Small Business Institute said Monday that the MERS outbreak could hamper economic growth for a quarter of the year because it was damaging small vendors and small manufacturers.
"As the expansion of MERS slows down consumption and production of individuals, and affects exports in the mid to long term, it can hamper economic recovery," the institute said in a report.
As many consumers avoid crowded places for fear of contacting the virus, department stores saw sales for the first week of June fall 16.5 percent from a year ago, while retail outlets had a dip of 3.4 percent.
There has been demand in the market for the government to set a supplementary budget to sustain the economy. According to an analysis by the Korea Development Institute (KDI), the supplementary budget in 2013 pulled the economic growth rate up by 0.3 percentage points.
When asked about the size of the supplementary budget, however, Choi said: "It isn't time yet to reveal the details. We are still open to diverse options." He said the ministry will make a final decision as soon as possible and report it to the National Assembly.
While the government has not come up with the exact amount, Hyundai Research Institute said in a report that around 20 trillion won would be needed to attain a 3 percent economic growth rate. "To maximize the effect, the supplementary budget should be set as soon as possible and it should be considerable in size," the institute said.
The opposition party has been demanding an increase in corporate tax to supplement fiscal health, but the minister was skeptical.
"Bolstering the economy through a supplementary budget while increasing tax will be like pressing the accelerator and the brake at the same time," Choi said.
Regarding household debt, the minister said, "this is currently at a controllable level. We continue to examine it before making policies."
The government is considering measures to boost the economy because of MERS, including a supplementary budget, the finance minister said Monday.
"The government is thoroughly examining the damage to the economy incurred by Middle East Respiratory Syndrome (MERS)," Strategy and Finance Minister Choi Kyung-hwan told the National Assembly. "It has already damaged the economy considerably."
He said even if the MERS outbreak were contained early, the government would consider measures to prop up economic growth, including setting a supplementary budget.
The comment comes amid increasing concern that MERS is damaging the economy, which has already been suffering a loss of growth momentum.
The Korea Small Business Institute said Monday that the MERS outbreak could hamper economic growth for a quarter of the year because it was damaging small vendors and small manufacturers.
"As the expansion of MERS slows down consumption and production of individuals, and affects exports in the mid to long term, it can hamper economic recovery," the institute said in a report.
As many consumers avoid crowded places for fear of contacting the virus, department stores saw sales for the first week of June fall 16.5 percent from a year ago, while retail outlets had a dip of 3.4 percent.
There has been demand in the market for the government to set a supplementary budget to sustain the economy. According to an analysis by the Korea Development Institute (KDI), the supplementary budget in 2013 pulled the economic growth rate up by 0.3 percentage points.
When asked about the size of the supplementary budget, however, Choi said: "It isn't time yet to reveal the details. We are still open to diverse options." He said the ministry will make a final decision as soon as possible and report it to the National Assembly.
While the government has not come up with the exact amount, Hyundai Research Institute said in a report that around 20 trillion won would be needed to attain a 3 percent economic growth rate. "To maximize the effect, the supplementary budget should be set as soon as possible and it should be considerable in size," the institute said.
The opposition party has been demanding an increase in corporate tax to supplement fiscal health, but the minister was skeptical.
"Bolstering the economy through a supplementary budget while increasing tax will be like pressing the accelerator and the brake at the same time," Choi said.
Regarding household debt, the minister said, "this is currently at a controllable level. We continue to examine it before making policies."
