[Economic Outlook] Will the 4th Disaster Relief Fund Be Distributed Nationwide After Customized Support... Interest Rates Likely to Remain Unchanged

More Support Targets Including Small Business Owners and Special Employment Types... "Broad and Substantial Support"
Nationwide Disaster Relief Fund Likely to Be Discussed

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The government is expected to finalize the target recipients and scale of the 4th disaster relief fund this week. After the distribution of the 4th disaster relief fund, discussions on a nationwide disaster relief fund are anticipated to continue. Additionally, the Monetary Policy Committee (MPC), which sets the base interest rate, will convene, and the Bank of Korea will release revised economic forecasts.

The ruling party and the government are likely to prepare the final plan for the 4th disaster relief fund distribution. Since the ruling party and government agreed on disbursement in March, it is highly probable that a supplementary budget bill will be submitted to the National Assembly in early March.

The core of this 4th disaster relief fund is to provide broader and more substantial support to small business owners who have suffered cumulative damage due to the third wave of COVID-19.

Previously, President Moon Jae-in stated regarding the 4th disaster relief fund, "Support should be as broad and substantial as possible," and added, "The government will actively work to ensure that the relief measures minimize blind spots."

Furthermore, support measures for vulnerable employment groups such as special employment types (teukgo), women, and youth are also expected to be included.

The Bank of Korea's MPC is expected to maintain the base interest rate at its policy meeting on the 25th. Given that the decline in COVID-19 cases is not yet clear, the likelihood of raising the base rate is low. However, considering concerns about overheating in asset markets such as real estate and stocks, it is also unlikely that the rate will be lowered easily. Therefore, the MPC is expected to continue its sixth consecutive rate-holding stance following July, August, October, and November of last year, and January of this year.

Immediately after the MPC meeting, the Bank of Korea will also release revised economic forecasts. Attention will focus on whether the Bank will revise the economic growth projections made in November last year (3% for 2021 and 2.5% for 2022) in light of recent export improvements.

Meanwhile, Statistics Korea will announce birth and death statistics for last year on the 25th. These statistics provide insights into changes in population trends such as marriage, childbirth, and mortality over the past year.