IB Economics IA (Macroeconomics) 7점/ 경제IA

S.Korea proposes $5.9 bln fiscal stimulus to tackle air pollution, aid exports

SEJONG, South Korea, April 24 (Reuters) – South Korea announced a proposed 6.7 trillion won ($5.87 billion) supplementary budget on Wednesday to tackle unprecedented air pollution levels and to boost exports bruised by weak external demand amid the Sino-U.S. trade war.

The planned stimulus package allocates 2.2 trillion won to battle air pollution, including subsidies for replacing old diesel-powered cars as well as for buying air purifiers and using renewable energy technologies, the finance ministry said.

Another 4.5 trillion won will be used to increase export credit financing and to create jobs. “(The extra budget is) to resolve national predicament caused by fine dust and to support the public economy through pre-emptive economic measures,” the ministry said in a statement.

It sees the extra budget lifting Asia’s fourth-largest economy’s growth by 0.1 percentage point this year and adding at least 73,000 jobs, Finance Minister Hong Nam-ki told a briefing.In March, parliament approved a bill designating the air pollution problem a “social disaster”, paving the way for President Moon Jae-in’s government to draft a fiscal stimulus programme to combat it. Also in March, exports contracted for a fourth month in a row.

Last week, the central bank cut its 2019 growth forecast to a seven-year low of 2.5 percent, underlining worries that weak external demand and trade frictions could stunt economic recovery. A loss of jobs is also a worry.

South Korea’s unemployment rate jumped to a nine-year high in January, hurt by the government-led hikes in minimum wages and growth concerns among businesses.

Employment conditions improved slightly in March, but it is still in a difficult situation, according to the finance ministry…