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South Korea Announces $40 Billion Stimulus

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South Korea has unveiled a $40bn (£23bn) stimulus package to help boost the economy.

The funds will be used to offer financial support to small and medium-sized companies, create jobs and stimulate the property market.

The stimulus was unveiled the same day data showed a decline in economic activity in South Korea.

Gross domestic product (GDP) grew 3.6% from a year earlier in the second quarter.

That is a slowdown from 3.9% growth in the first quarter.

Asia’s fourth-largest economy relies heavily on exports, which has been dragged down by a slower-than-expected recovery in global demand.

This is the second round of stimulus from the South Korean government. In April, it pushed through a $15bn economic stimulus plan, also to help boost growth.

Rajiv Biswas, Asia-Pacific chief economist from consultancy IHS says “the additional fiscal stimulus package should ensure that Korean GDP growth momentum recovers in the second half of 2014”.

“The stimulus package should provide a 0.3% boost to GDP growth for 2014,” he added.

In addition to the GDP data and the stimulus measures, South Korea’s finance ministry this morning again lowered the country’s growth forecast to 3.7% from 3.9% for this year – the second revision in recent weeks.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza

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