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(2nd LD) S. Korea to offer 2 tln won in financial support to small merchants amid virus fallout

All News 11:07 February 07, 2020

(ATTN: ADDS remarks, details in last 4 paras)
By Kim Deok-hyun

SEOUL, Feb. 7 (Yonhap) -- South Korea will provide 2 trillion won (US$1.7 billion) in financial support to small merchants who are expected to take a hit from the rapid spread of the novel coronavirus, Finance Minister Hong Nam-ki said Friday.

South Korea also plans to begin consultations with China's local governments to ask them to resume operations of their auto parts plants, Hong told a meeting with economic ministers.

The virus outbreak has already disrupted the supply of auto parts in South Korea. Hyundai Motors and Kia Motors said they have suspended some of assembly lines here due to shortages of parts from China.

The move comes as the rapidly spreading coronavirus, which originated in China, could cast a shadow on the nation's fragile economic recovery.

Finance Minister Hong Nam-ki speaks at a meeting with economic ministers on Feb. 7, 2020. (Yonhap)

Hong said the government is closely monitoring the industries that are expected to be affected most by the virus fallout, such as exports, hotels and restaurants, transportation services and small businesses.

With demand for protective masks and hand sanitizer soaring, the government will implement measures next week to control their supply, Hong said.

Earlier this week, South Korea approved tougher penalties against those who hoard protective masks, as China's coronavirus outbreak has sparked a sharp rise in demand for such items.

Under the tougher penalties, a person who hoards masks will face a prison sentence of up to two years or a maximum fine of 50 million won.

The penalties went into effect Wednesday.

"The government will do the following to discourage market manipulation, particularly in the face mask market," Hong said.

Still, it is difficult to gauge how broadly the virus will spread, but the little-known disease is expected to negatively affect the Korean economy, analysts said.

"Unless the new coronavirus is swiftly contained, it could have a downside risk on the economy," Hong said as he met senior executives earlier in the day.

The government will draw up all possible measures to prevent the economy from losing its recovery momentum, he said.

South Korea's economy grew 2 percent last year, the slowest growth in a decade. The Bank of Korea expects the nation's economy to grow 2.3 percent this year.
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