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| Deputy Prime Minister and Finance Minister Hong Nam-ki, second from right, speaks during a ministerial meeting at the Seoul Government Complex in Gwanghwamum, Wednesday. Yonhap |
By Lee Kyung-min
Consumer prices jumped 0.6 percent in November, the second consecutive month of an increase below 1 percent, increasing concerns that the COVID-19 pandemic-triggered slowdown in local demand will not recover any time soon.
The data released Wednesday, and indicative of sagging economic activity, undercut the confidence expressed by Deputy Prime Minister and Finance Minister Hong Nam-ki who played up an economic forecast released by the Organization for Economic Cooperation and Development (OECD) a day earlier, which said the Korean economy sustained the least contraction in gross domestic product (GDP) among the group of economically well-to-do countries.
The top policymaker's optimism was further dented by a spike in the number of bankruptcy filings, mostly by low-income earners and small- and medium-sized enterprises (SMEs).
Experts say painting a rosy picture is premature since the OECD projection was not due to Korea's superb economic policy responses but from the poor performance of its global peers.
The organization said Tuesday that the local economy is expected to contract 1.1 percent for 2020, a figure revised from the 1 percent contraction projected in September.
The global economy, it added, is expected to contract 4.2 percent, an upbeat view compared to September when it said the contraction would be 4.5 percent.
Statistics Korea data showed that consumer prices increased 0.6 percent month-on-month, as an 11.1-percent increase in agricultural produce prices managed to offset the drop in those for industrial products.
Services prices inched up 0.4 percent, driven in part by price increases of grocery items as many people chose to cook at home over eating out.
"Jeonse" increases hit a 2-year high of 0.8 percent, while monthly rent also climbed 0.4 percent.
Unique to Korea, jeonse is a home renting system whereby tenants pay a lump sum refundable deposit with no monthly rent payable.
"The below-1 percent price increase is explained by many people tightening their purse strings as their finances are increasingly becoming shaky," said Seoul National University economist Kim So-young.
Conditions are exacerbating even faster for low-income earners and SMEs, as illustrated by a steep rise in the number of the bankruptcy filings.
Data from the Supreme Court showed 41,257 such requests were filed between January and October, up 3,303, or 8.7 percent, from 37,954 a year earlier.
This is a further increase from 35,760 in 2018 ― the figure was 36,751 in 2017.
The most frequently cited reason for seeking the legal remedy was COVID-19. Two previous reasons were the Asia financial crisis in the late 1990s and the global financial crisis in the late 2000s.
"Many of the requests will continue to be understandably sought by people put on unpaid leave because full containment of the virus is unlikely for the time being," Kim said.
Meanwhile, the National Assembly passed a bill finalizing the 2021 budget at the amount of 558 trillion won, up 2.2 trillion won from the amount proposed earlier.
The net increase of 2.2 trillion won was set after the ruling and opposition parties agreed to spend 7.5 trillion won on housing policies and emergency relief for low-income earners hit by the pandemic, as well as vaccination costs for the entire population. The lawmakers cut about 5.3 trillion won from other state-run projects.
Those eligible for the third emergency relief will be able to seek the cash handouts starting Jan.1, 2021.
