(LEAD) Economic fallout from 4th wave of pandemic to loom larger from Aug: minister

All News 08:41 August 12, 2021

(ATTN: RECASTS lead; UPDATES with more details in paras 4, 6-10; ADDS photo)
By Kim Soo-yeon

SEOUL, Aug. 12 (Yonhap) -- The potential economic fallout of the fourth wave of the pandemic will be "inevitable" starting in August amid concerns that the recent virus resurgence will likely slow the economic recovery, South Korea's top economic policymaker said Thursday.

Finance Minister Hong Nam-ki said the government will make efforts to minimize the economic shocks from the latest flare-up in COVID-19 cases.

For over a month, the greater Seoul area, along with other regions, have been under tougher virus curbs, which include limiting business operations and banning certain types of private gatherings.

Hong said Wednesday the third quarter will be a critical period in deciding whether the South Korean economy can achieve the 2021 growth target of 4.2 percent.

This photo, taken Aug. 5, 2021, shows stores with for lease signs in the shopping district of Myeongdong in central Seoul amid the fourth wave of the pandemic. (Yonhap)

The country's new daily virus infections have topped 1,000 for more than a month despite the tougher distancing rules. Its daily new coronavirus cases hit a new high of 2,223 on Wednesday, raising the total to 216,206.

Asia's fourth-largest economy has been on a recovery track on the back of robust exports and improving domestic demand.

Exports, which account for half of the country's economy, rose 46.4 percent on-year in the first 10 days of August on strong demand for chips and petroleum products.

But the latest COVID-19 resurgence and the fast spread of the highly transmissible delta variant have emerged as major downside risks for the economic recovery.

The finance ministry earlier said the current wave of the pandemic is feared to dampen consumer and business sentiment, potentially hampering reviving domestic demand.

The country reported job additions for the fifth straight month in July, but the growth pace slowed as employment in face-to-face service segments was hit hard by the fourth wave of the pandemic.

The country created an extra budget of 34.9 trillion won (US$30.2 billion) to finance another round of emergency relief funds for smaller merchants and people in the bottom 88 percent income bracket hit hard by COVID-19.

The government seeks to provide more than 90 percent of the relief aid to the recipients by the end of September.