South Korea’s government will introduce a second supplementary budget for the year on Thursday, after passing a 13.8 trillion won ($10.13 billion) budget in May, to support an economy weighed down by U.S. tariffs and sluggish consumer demand.
The budget plan will include spending to help the recovery of people’s livelihoods and will be taken up at a cabinet meeting, a spokesperson at the presidential office said on Monday.
President Lee Jae-myung, who took office on June 4, has argued for expansionary fiscal policy and cash-like handout schemes to boost consumer demand, as the country’s central bank last month slashed this year’s economic growth outlook to 0.8%, nearly half the previous 1.5%.
Among specific measures, spending to ease the burden of rising food prices will be included in the plan, Acting Finance Minister Lee Hyoung-il said at a separate meeting on inflation.
At the meeting, the government decided to extend tax breaks on oil products by two months to the end of August, in response to a surge in oil prices amid heightened geopolitical tension in the Middle East.
Financial support and import quota increases were introduced to stabilise rising food prices, which President Lee Jae-myung said were causing “too much pain”, while tax cuts on car purchases were extended until the end of the year to support the auto industry.
South Korea’s consumer inflation weakened to a five-month low of 1.9% in May, below the central bank’s medium-term target of 2% and market expectations, as petroleum prices dropped 2.3% from a year earlier, but prices of processed food products jumped 4.1% and dining services rose 3.2%.
(Reporting by Jihoon Lee)
