President Yoon Suk Yeol announced on Wednesday that South Korea’s government is preparing financial assistance for small businesses grappling with challenges attributed to high interest rates.
Yoon highlighted the persistent difficulties faced by small enterprises, including heightened interest burdens, escalating wage and rent costs. The government has earmarked a total of 25 trillion won ($18 billion) in support measures to alleviate these pressures.
Despite the South Korean central bank’s decision to maintain its policy rates at a 15-year peak during its May meeting, concerns persist over inflationary risks. The country’s economy experienced its swiftest growth in two years during the first quarter, driven by robust exports. However, there are apprehensions that high interest rates might constrain domestic demand, potentially leading to an uneven recovery.
In addition to financial support for small businesses, the government’s forthcoming economic policy announcement includes tax advantages for companies that increase dividend payouts as part of the “Corporate Value-up Programme” aimed at bolstering the domestic stock market.
President Yoon noted that consumer prices are stabilizing, with headline inflation decreasing for a third consecutive month, and foreign investment inflows remaining robust. Subsequent to Yoon’s comments, Finance Minister Choi Sang-mok stated that the ministry has upgraded its economic growth forecast for the year to 2.6% from the previous 2.2%.
