Economy in general: Economy: News: Hankyoreh

2020 is remembered as the year when the Corona 19 pandemic hit our economy. In order to escape from the unprecedented infectious disease economic crisis, supplementary administrations were organized four times a year, and the standard interest rate went directly to the 0% level. Despite the stagnation of the real economy, thanks to liquidity and expectations for an economic recovery, the stock price reached an all-time high, and house prices continued to rise.

As the Corona 19 incident continued for a year, the government budget was revised four times a year to respond to the damage. It has been 59 years since 1961. In March, at the beginning of the coronavirus outbreak, the first supplementary budget of 11.7 trillion won, including the expansion of mask production and the payment of consumption coupons for low-income families, was made, and the second supplementary supplement (12,200 billion won) was made in April to provide emergency disaster support for the whole country. Organized. When the employment shock intensifies, a third supplementary supplement (35 trillion KRW) containing measures for employment security, etc., in June, and the fourth supplementary supplement to support the victims, such as small business owners and special high schools, in September as the damage to self-employment increased due to the re-proliferation of Corona 19 (7). KRW 800 trillion). The total additional budget is 66 trillion won. However, Corona 19 is still in progress, and demand for additional administration is expected to continue next year. The first year of’standard interest rate 0%’ was opened due to the corona 19 pandemic. The Bank of Korea held an interim Financial Monetary Committee on March 16 and cut the base rate by 0.5 percentage points from 1.25% per annum to 0.75% per annum. This is because there is a growing concern that the economy will contract due to the spread of the corona and the financial market uncertainty will spread to the real economy. On May 28, two months later, the BOK predicted that the Korean economy will grow negative this year due to the decline in exports and investment, and lowered the benchmark interest rate to 0.5% again. Accordingly, the bank’s new savings interest rate also entered the 0% range in June this year from 1.6% at the end of last year, and in August fell to 0.81%, the lowest since the 1996 statistics. The interest rate for new loans also fell to a record low of 2.63% in August. The phenomenon of’increased house price domino’ that swept across the country this year was close to a frenzy. According to the statistics of KB Kookmin Bank, in December, the nationwide housing (apartment, single-family housing total) sales price rose 8.35% compared to last December. This is the highest annual increase rate in 14 years after the 11.60% increase in 2006 during the participatory government. House prices in Seoul rose 10.70%, and when looking at apartments alone, it rose 13.06%. In Sejong City, the largest increase in house prices in the country, the rise rate of apartment prices reached 44.97%, and the rate of increase in rental prices recorded 27.61%. In order to catch the fire of the recent increase in house prices, the government has significantly increased regulated areas such as areas subject to adjustment, and in the metropolitan area, it has taken full action to expand housing supply.

The Kospi, which had fallen below the 1500 line in March immediately after the Corona 19 incident, rebounded dramatically, continuing its record highs, breaking even the 2800 line on the 24th. Korea’s rising stock price was even more prominent compared to other countries. Looking at the annual growth rate (based on the closing price on the 22nd) of each country’s representative stock indices, Korea was the highest among the 20 major countries (G20) at 24.4%. The main role that raised the stock price was individual investors. Until the 22nd of this year, individual investors net bought 47.9 trillion won from KOSPI. This is 6.8 times the previous maximum of 7 trillion won in 2018. The total amount of net purchases including the KOSDAQ market is 65.4 trillion won, which is 6 times the previous high of 10.9 trillion won (2018). This is the background that gave birth to the new word’donghak ant’.

This year, household loans increased significantly due to the combination of demand for investment in asset markets such as real estate and stocks and demand for livelihoods caused by Corona 19. The increase in household loans in January alone reached 1.9 trillion won, but in June, it increased sharply to 8.5 trillion won. In the second half, it reached 14 trillion won in August and 13 trillion won in October, the third and fourth since the statistics were written in 2015. The increase was large. November was the highest in history, increasing by 18.3 trillion won. From January to November this year, household loans increased by 103 trillion won, far exceeding the increase over the same period last year (48 trillion won) and 2018 (68 trillion won). Mortgage loans and credit loans accounted for a large proportion, and some received insurance contract loans and card loans. ‘From Kirinah in the capital market to a minefield.’ Private equity funds, once in the limelight for high returns to investors, crashed this year with massive losses to investors. More than 500 private equity funds have ceased to be repurchased, resulting in losses incurred by individual investors exceeding 6 trillion won. In the case of Lime Optimus Fund, the guilt is not very good. This is because it is not because of a mistake while managing investment assets, but because there are high suspicions of fraud from the stage of designing and selling the fund. Optimus said it was investing in stable public institution accounts receivable, but it rarely invested in such bonds. It was nothing but a Ponzi-type scam that divides existing investors with investor money that came later. In this incident, most of the domestic financial companies are involved, and it is expected that the largest number of financial companies since the 1997 financial crisis will be recorded.

The Corona 19 crisis has brought an attempt to break out of the existing welfare system. In May, the government spent a total budget of 14.3 trillion won and paid emergency disaster assistance to a total of 21.7 million households. One-person households received 400,000 won, two-person households 600,000 won, three-person households 800,000 won, and four or more households received 1 million won. It was the first time that a system similar to’basic income’ was introduced that does not take into account any requirements such as income or work. However, to induce consumption, most households were paid in the form of prepaid cards and gift certificates instead of cash. The government explained that the credit card approval performance in the second quarter, when the emergency disaster subsidies were used, increased by 1.8% compared to the same period last year, contributing to boosting consumption and stabilizing household life. On the other hand, it received various evaluations, including the results of research conducted by state-run research institutes saying that the effect compared to input was not great.

In 2020, the passage of the’Three Lease Act’ by the National Assembly marked a milestone in protecting tenants’ rights. Tenants were guaranteed the right to apply for contract renewal after 40 years of enactment of the Housing Lease Protection Act in 1981, and a monthly tax limit system was introduced that limits the increase in rent to 5% or less when renewing contracts. In addition to the lease reporting system in effect in June of next year, the reform of the rent to cheonsei market called the’Three Lease Act’ took its first step, but there were also many side effects. The jeonse price has soared, centering on new contracts that do not apply to the cheonsei limit system, and the word “refugee jeonse” has garnered the news as there have been several cases where the landlords have not been able to exercise their renewal rights due to the landlords who decided to live. Deputy Prime Minister Hong Nam-ki was also summoned to the Chief of State Administration as a’Mapo-gu Jeonse refugee’.

It is predicted that this year, the Korean economy will be reversed for the first time since 1998 (-5.1%) during the financial crisis due to the economic shock from Corona 19. In particular, the polarization by class and company size was remarkable. In the third quarter of this year, the bottom 20% (1st quintile) earned income decreased 10.7% from last year, while the top 20% (5th quintile) decreased 0.6%, showing a contrast. In the second quarter, the first quartile decreased by 18.0% and the fifth quintile decreased by 4.0%. By company size, production of large manufacturing companies decreased by 3.7% from the previous year in the second quarter of this year and increased by 2.3% in the third quarter, while SMEs continued to decrease to -10.2% and -2.6%. In the service industry, large corporations recovered from -1.9% to 0.3%, but small and medium-sized enterprises (-4.6%) and -3.6% are still experiencing difficulties. In addition, the employment shock was greater for women and young people.

The government announced the’Korean version of the New Deal Comprehensive Plan’ in July. Following the US President Roosevelt’s “New Deal Policy” during the Great Depression, large-scale fiscal investments were put in place to overcome the corona crisis and to achieve social and economic qualitative changes. The government aims to create 1.9 million jobs by investing 160 trillion won in the Korean version of the New Deal by 2025 to strengthen the employment and social safety net as well as promote the digital and green New Deal. In addition, the’Regional Balanced New Deal’, which promotes and discovers a New Deal project with local governments, has also been added, taking into account that the local government is mainly promoting the New Deal project. However, considering the fact that the Moon Jae-in administration’s term in office is until 2022, along with criticism that the government’s project was tied to the Korean version of the New Deal, doubts about the sustainability of the Korean version of the New Deal are raised. Ministry of Economy synthesis