BY Matt Atkins
In response to a decline in economic activity, South Korea has announced a $40bn stimulus package to help turn around the country’s sluggish output. The package has been earmarked largely to support small and medium enterprises and boost the property market.
This is the second attempt to boost growth this year, after the South Korean government pushed through a $15bn stimulus plan in April.
Data released on Thursday 24 July revealed the extent of South Korea’s decline. While GDP grew 3.6 percent from a year earlier in the second quarter, the figure represents a slowdown of 0.3 percent on the first quarter of 2014.
South Korea is Asia’s fourth-largest economy, but relies heavily on exports which have suffered from low global demand. In addition, the country has been hit hard by the sinking of the Sewol ferry, which claimed the lives of 300 people. Earlier in July, South Korea’s central bank lowered its forecast for economic growth, citing the impact of the tragedy on consumption.
The country’s finance ministry lowered the country's growth forecast for this year from 3.9 percent from 3.7 percent – the second revision in recent weeks. The new stimulus package marks the first push by recently appointed finance minister, Choi Kyung-hwan, to introduce promised aggressive measures to bolster growth.