Let met begin the 43rd Cabinet Meeting.
As COVID-19 is spreading again, the red light has come on not only for our epidemic prevention and control efforts but for our economy. Thanks to our effective disease fighting measures as well as proactive expansionary fiscal policy, Korea is seen as the OECD’s most successful member state in terms of managing the economy. We are also projected to have the fastest economic recovery. The objective of the Government is to achieve a rebound in growth from the third quarter. However, the recent resurgence of COVID-19 is slowing the pace of the economic rebound and raising fears about additional economic hardships. It is particularly worrisome that consumption and domestic demand – which have been showing signs of recovery – might shrink again. The self-employed and microbusiness owners are suffering increasing anxiety, and neighborhood commercial areas are coming under threat. Wholesale and retail trade as well as the service industry, typified by tourism, travel, lodging and dining, were gradually regaining vitality but have started to suffer again.
If protracted implementation of Level 2 social distancing becomes inevitable as a disease-prevention measure, strains on the economy will increase further. We need an extraordinary economic response to this possibility. However, I urge you to ensure that emergency economic countermeasures this time are carried out in a way that works in harmony with our disease fighting efforts. Success in epidemic prevention and control can actually revive the economy. Enhanced epidemic prevention measures are the way to safeguard the people’s lives and safety and, at the same time, a shortcut to economic recovery. We have to endure some economic difficulties in the short term, but we can hasten economic recovery only when we have brought the COVID-19 crisis under control at an early stage.
However, we cannot afford to neglect the economy for a single moment while we strengthen measures to prevent the virus from spreading. Epidemic prevention and the economy are two rabbits that we must catch at the same time. So far, we have been successful in both areas. We have put forth special emergency economic measures in a bold and rapid manner while stepping up epidemic prevention measures. The Government has put in place an Emergency Economic Council, drawn up three supplementary budgets and worked out and implemented unprecedented support measures worth 277 trillion won.
The Government’s emergency economic measures have greatly contributed to maintaining employment and the livelihood of the socially vulnerable as well as resolving financial difficulties for firms and small- and microbusiness owners. They have also provided comfort and encouragement to people in need. International organizations such as the OECD and the IMF have consistently given a positive assessment of our Administration’s rapid and active response to the economy through its expansionary fiscal policy, and its effectiveness has also been proven by the Household Income and Expenditure Survey in the second quarter.
Although market income, including earned and business income, decreased due to the COVID-19-induced economic crisis, the Government’s active financial support helped increase transfer income, raising total income among all quintiles. In particular, the income of the 1st quintile, the poorest 20 percent, increased by the largest margin, and this helped improve distribution indicators. This is the result of the Government having exercised a determination to shatter the crisis-deepens-inequality formula through our all-encompassing efforts. We were able to confirm the Government’s importance as a buttress to safeguard the people’s lives.
The Government must brace for this resurgence of COVID-19 with extraordinary determination. We have to establish possible scenarios with regard to the spread of COVID-19 and thoroughly prepare scenario-specific countermeasures. We need to examine the impact of the implementation of Level 2 social distancing on the economy and people’s livelihoods. If necessary, we will also have to supplement or add to existing emergency economic measures.
First of all, I ask you to reinforce the already-announced economic policies for the second half of this year in line with the changing situation. We have provided fiscal and large-scale financial support through three supplementary budgets, but I urge you to immediately check for any shortcomings.
In addition, jobs are what is most important. I call upon you to meticulously look into relevant support to promote job retention and security and to facilitate employment. I also ask you to pay special attention to those vulnerable, small- and microbusiness owners and the self-employed who have more difficulties due to the resurgence of COVID-19.
It is also essential to devise necessary measures through additional analysis of COVID-19’s impact on industry-specific business lines. I ask you to make preparations so that measures to boost consumer spending and stimulate domestic demand can be quickly implemented once the COVID-19 situation is brought under control.
Regarding investment plans, I would like you to work out ways to invigorate private sector-led investment while initially expanding public sector-led investments further.
It is also necessary to quickly implement planned fiscal spending. In order to provide assistance for immediate recovery from flood damage and address difficulties facing our economy and people’s livelihoods, I ask you to promptly secure and inject all the additional financial resources available, including not only the reserve funds but also reallocated funds. We will also have to move implementation of the third supplementary budget plan forward along with efforts to minimize the amount of unused or carried-over fiscal resources.
Investments in the future should never be stopped regardless of any difficulty that may get in our way. The Korean New Deal is, in particular, a national strategy for the Republic of Korea’s future. I ask you to expedite the expansion of the employment and social safety nets while doing your best to promote the transformation into a new economy and create a large number of jobs by steadily implementing the Digital New Deal and Green New Deal projects. I would also like you to give impetus to nurturing the three designated industries – system semiconductors, biohealth and future cars – into future growth engines.
A pan-government emergency response is needed for both the economy and epidemic prevention and control efforts. The Government has established and run the emergency response system through the two pillars of the Central Economic Response Headquarters and the Central Disease Control Headquarters. Together with our extraordinary epidemic prevention and control system for combating the spread of COVID-19, I ask you to concentrate government capabilities on measures to stabilize employment and people’s livelihoods, minimize economic damage and promote economic recovery. If necessary, we may convene a presidential Emergency Economic Council meeting.