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(LEAD) Flare-up in COVID-19 cases ups economic uncertainty: ministry

All News 10:59 July 16, 2021

(ATTN: UPDATES with more info in last 3 paras; ADDS photo)

SEOUL, July 16 (Yonhap) -- The South Korean economy is on a recovery track, but a recent flare-up in COVID-19 cases could heighten uncertainty over an improvement in domestic demand, the finance ministry said Friday.

In its monthly economic assessment report, the ministry said the country's exports remain robust and domestic demand showed signs of improvements while the job market is recovering from slumps.

"But a resurgence in COVID-19 cases could increase uncertainty about domestic demand," the Ministry of Economy and Finance said in the Green Book.

In recent months, the ministry assessed that private consumption has improved, but it voiced concerns about the impact of the latest spike in virus cases on domestic demand.

South Korea is grappling with the fourth wave of the pandemic, as the virus resurgence and the fast spread of the highly contagious delta variant are posing a challenge to the country's virus fight.

This photo, taken July 12, 2021, shows an empty street in Seoul's shopping district of Myeongdong amid a flare-up in COVID-19 cases. (Yonhap)

The country added 1,536 new COVID-19 cases Friday, marking the 10th straight day of new daily cases topping 1,000. It set a record high for daily cases Wednesday with 1,615.

The country on Monday began implementing Level 4 social distancing rules, the highest-level in its four-tier scheme, in the greater Seoul area for two weeks.

The June economic data pointed to consumer spending improving. Credit card spending grew 8.4 percent on-year in June, marking the fifth straight month of gains.

Last month, sales at department stores and online spending at retailers increased from a year earlier.

Finance Minister Hong Nam-ki said that despite the virus resurgence, Asia's fourth-largest economy would be able to achieve its annual growth target of 4.2 percent.

The ministry said the global economy is on a recovery path, but amid lingering concerns about inflation, a global resurgence in coronavirus cases will serve as downside risks.

Kim Young-hoon, a senior ministry official, said it is too early to say that the virus flare-up would undercut economic recovery momentum as exports and investment remain solid.

He cited the possibility of sooner-than-expected tapering of bond purchases by the Federal Reserve as a major downside economic risk.

"A sudden change in accommodative policy stances could increase volatility in the financial market and negatively affect the real economy," Kim told reporters.

This photo, taken July 12, 2021, shows citizens waiting in a long line to receive COVID-19 tests at a state-run health center in southern Seoul amid spiking virus cases. (Yonhap)


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