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| 2020.5.19/News 1 |
An analysis of a state-run research institute showed that the first disaster support fund for novel coronavirus infection (Corona 19), which was paid in a universal manner to the public, actually had the effect of raising sales by about 30% of the invested budget.
In particular, it was analyzed that essential goods such as marts and groceries, as well as clothing and furniture, saw the effect of boosting consumption, and that the effect was limited in the face-to-face service and the restaurant industry.
On the 23rd, the Korea Development Institute (KDI), a national research institute, released policy forum No. 281’Effects and Implications of the First Emergency Disaster Subsidy Policy’ on the 23rd.
According to this, the first disaster support fund paid at a maximum of 1 million won per household in May was evaluated to have partially contributed to the recovery of private consumption immediately after payment.
The increase in credit and debit card sales due to the payment of disaster support was estimated to be about 4 trillion won. This is at the level of 26.2% to 36.1% of the invested financial resources, and the effect of the disaster subsidies floating in the port was confirmed in concrete figures.
KDI said that this consumption boosting effect is similar or higher than that of overseas cases.
Specifically, it is higher than the consumption increase effect (about 24.3%) of the consumption coupons paid by Taiwan in 2009, and is similar to the policy that the US supported household income through tax cuts in 2001 (20-40%).
However, it is estimated that the remaining 70% of the disaster subsidies that did not lead to consumption were spent by households to pay off debts or save money.
KDI Research Fellow Oh Yun-hae explained, “After using the disaster support fund paid in the form of a consumption coupon, it seems that he saved another portion of his or her original income.”
In addition, not all industries received the effect of boosting consumption from the payment of disaster subsidies.
As a result of analysis by industry, the effect of increasing sales from the payment of disaster subsidies was large in durable goods and essential goods that did not require face-to-face contact. On the other hand, the increase effect was relatively small in the face-to-face service and food industry, which was hit directly by the Corona 19 incident.
The effect of increasing sales from the payment of disaster support was in the order of (quasi) durable goods (10.8%p), essential goods (8.0%p), face-to-face service (3.6%p), and food service (3.0%p).
In response, KDI judged it as “because consumers concerned about infection are reluctant to consume face-to-face services in a situation where the spread of Corona 19 continues.”
Looking at the effect of stimulating consumption by period, the effect was very large for a month immediately after the disaster subsidy was paid, and the effect decreased thereafter.
In particular, sales declined in early August, which was analyzed because households executed a consumption plan scheduled for the future (August) in the process of significantly increasing consumption immediately after the emergency disaster support payment (May).
KDI requested support for’selection’, as the consumption boost caused by the universal payment of disaster subsidies did not reach some affected industries such as face-to-face services.
KDI emphasized, “In the situation of the spread of infectious diseases, there is a limit to expanding sales of businesses with large damages such as travel and face-to-face service only by preserving household income through the payment of disaster support, so direct income support for workers in the affected industries is required.”
In particular, he evaluated that “the first emergency employment stabilization subsidy and the second disaster subsidy paid to small self-employed persons, specially employed persons, and unpaid leavers will partially supplement the limitations of the first disaster subsidy.”
KDI said, “It is necessary to focus on income support according to the degree of direct damage from Corona 19 rather than indirect standards such as the past income quintile,” and “It is necessary to collect and analyze data on the amount of damage by economic entity in advance, and to quickly and accurately identify the affected class. We have to build a system that can support it.”
This policy forum uses the Ministry of Public Administration and Security’s policy research service report’Research II on Emergency Disaster Subsidies’ published on the same day as the main reference.