[Asia Economy Reporter Kim Heung-soon] Kim Yong-beom, First Vice Minister of the Ministry of Economy and Finance, stated on the 30th regarding the domestic and international economic situation amid the spread of the novel coronavirus infection (COVID-19), "The best scenario at this point is a rebound after about two quarters of negative growth."
In a post on Facebook that day, Vice Minister Kim forecasted, "Even with the current COVID-19 shock alone, a deep recession in the global economy is inevitable, and what we really need to avoid is the risk of a prolonged downturn."
He noted that although COVID-19 is spreading worldwide, the global financial markets appear relatively stable. He added, "Countries in the Asia-Pacific region are relatively better off, but the damage in the Americas and Europe is severe," and pointed out, "COVID-19 has also caused an unprecedented employment shock."
Vice Minister Kim also said, "There are claims that the COVID-19 crisis is a bigger shock than the Great Depression, but fortunately, it has not yet escalated into a financial crisis," and evaluated, "Currently, the global financial markets have passed the worst phase and are in a stabilization phase." Furthermore, he emphasized, "This is largely thanks to the bold and agile policy responses by central banks and fiscal authorities worldwide," and added, "The central banks of the United States and Europe have established the principle of doing whatever it takes, and these central banks have demonstrated impressive resilience."
However, he warned that if the support measures issued by central banks and financial authorities expire, difficulties in the private economy could worsen. Vice Minister Kim said, "The extraordinary emergency support programs introduced urgently by many countries will expire after a few months," and predicted, "If the economy does not properly recover after that, the hardships faced by households will become a harsher reality."
He added, "If large-scale support programs are extended further, the economic shock will lessen, but a fundamentally different debate is inevitable regarding the limits of fiscal policy and who will bear the enormous burden."
Vice Minister Kim remarked, "There are many predictions that COVID-19 will bring about the end of globalization," and pointed out, "Watching the ongoing conflict between the U.S. and China unfold right before our eyes, such predictions do not sound like empty words." He also expressed confidence in the inertia and resilience that the world has shown by initially stumbling in the unprecedented pandemic shock but quickly upgrading existing systems to respond, emphasizing, "The world is already too deeply and intricately interconnected to return to a fortress society where each survives on its own."
Finally, Vice Minister Kim said, "Two months have already passed in the second quarter, which is expected to be the most difficult quarter," and added, "There is a mix of excitement that discharge is not far off and worry that pain may return once the effect of painkillers wears off."
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