The International Monetary Fund (IMF) evaluated that “the Korean government has been successful in reducing the spread of the novel coronavirus infection (Corona 19) and reducing the economic impact.” However, he cited uneven “K-shaped recovery” by sector and the highest level of household debt as tasks to be solved.
On the 30th, the IMF released a report’Mountains after Mountains: Korea is Containing COVID-19 and Looking Ahead’. The general review of the IMF about the Korean government’s response to the COVID-19 policy last year is positive.
First of all, the IMF diagnosed that Korea was well through the Corona 19 crisis based on its solid economic fundamentals (fundamental) and quarantine. The IMF explained, “We maintained a lower infection rate than other countries with quarantine policies such as extensive screening, tracking of infection routes, and customized treatment for severely ill patients.” Last year, Korea’s real gross domestic product (GDP) growth rate was only -1% due to financial support for victims and companies and measures to stabilize the financial market.
Although the Korean economy is recovering rapidly, the unequal recovery pattern by sector was cited as a problem. The IMF said, “Exports rebounded and corporate investment increased, but service and consumption were less than before the coronavirus.” He said, “The Korean government is maintaining adequate financial support and monetary policy in preparation for this K-shaped recovery and uncertainty.”
Korea’s macro-financial policy also survived the Corona 19 crisis relatively well, but he pointed out that large-scale household debt could become a’mountain-to-mountain’. The IMF said, “Household debt exceeds 190% of disposable income, the highest level of the Organization for Economic Cooperation and Development (OECD), and the proportion of real estate mortgage loans is large.” .
The IMF advised that as economic activity normalizes in the future, reforms are needed to increase growth potential and tolerance. The IMF said, “Korea is recording an outstanding economic growth rate, but in recent decades, the improvement of living standards has been slowing and productivity is lower than in other developed countries.”
The IMF emphasized that “the Korean version of the New Deal should be able to increase productivity in the service sector and alleviate the inequality faced by women, young people and the elderly.” He added, “It is also an important task to induce green investment, such as strengthening the carbon pricing system.”
Sejong = Reporter Seongbin Lim [email protected]