South Korea’s Government Response Towards Covid-19

As Covid-19 emerged ever since January 2020, it has been almost one year and a half since this pandemic has influenced our world. As this dreadful disease infected more and more people, all the countries’ economies were also affected by Covid-19. The enormous impact that Covid-19 has caused was about to make South Korea’s economy into a great depression, so the government had to take some action to block this incident from deteriorating. They used some new policies to maintain employment stabilization and price stability. 

Since the Covid-19 incident, the unemployment rate of South Korea has increased, resulting from the reduced number of jobs for unemployed people and plenty of people losing their work as most of the businesses were suffering from a diminished number of customers. According to those circumstances, the government gave employment retention subsidies to the firms to help them not fire employees and maintain their company. These increased subsidies encouraged companies not to shut down and pay their employees in the short term, which prevented the sudden collapse of the economy of South Korea. 

Furthermore, as the economy was in a recessionary gap, the government used monetary policy to increase the money supply of South Korea so that the economy could hold price stability and head toward economic equilibrium. The monetary policy was first started by the Bank of Korea, purchasing local bonds to decrease the economy’s interest rate so that investment could increase, reducing the recessionary gap of the economy. By applying this action, the government reduced the interest rate on loan facilities for small companies. They decided to add bonds to open market operations to improve the economy’s liquidity to get better from the recession.

By: Chaehyun Yun