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Delta variant threatens Korea's 'complete economic recovery'

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Exports, along with consumer spending, are considered to be crucial in achieving economic growth in the 4-percent range amid the COVID-19 pandemic. Korea Times file
Exports, along with consumer spending, are considered to be crucial in achieving economic growth in the 4-percent range amid the COVID-19 pandemic. Korea Times file

Government urged to pick up pace of vaccination drive as variant COVID-19 infections spread

By Yi Whan-woo

Detected cases of the Delta variant of COVID-19 are increasing in Korea, prompting concerns that the government's economic growth targets may be seriously impacted.

The variant is characterized by increased transmissibility and more severe symptoms.

The number of people infected with the variant strain is estimated to have reached more than 200 by the end of June, after it was first detected here in late April.

The latest cases involve nine people traced to an infection cluster in the trendy Hongik University district of Seoul, which has been connected to 213 infections in the greater Seoul area, resulting in the total number surging to 794 on June 30. This was the highest number of daily cases the nation has seen since late April.

The upsurge prompted the health authorities to delay plans to ease social distancing rules in the greater Seoul area starting July 1, and instead, to maintain the current social distancing measures for another week.

"The situation is worrisome, as it may slow down consumer spending and eventually discourage the government's targeted 2021 economic growth rate in the 4 percent range," said Lee Geun-tae, a senior research fellow at LG Economic Research Institute.

He noted that the Ministry of Economy and Finance revised up the annual growth outlook by 1 percentage point to 4.2 percent in its announcement on June 28. The Bank of Korea also upgraded its economic forecast by 1 percentage point to 4 percent.

Multiple economic think tanks have made similar forecasts, including the Korea Institute of Finance (4.1 percent), Korea Capital Market Institute (4.3 percent) and LG Economic Research Institute (4 percent).

"The 4 percent level growth is possible only when consumer spending increases on one hand and export volume expands on the other hand," Lee said. "There may be a downturn in consumer spending if the spread of the Delta variant becomes uncontrollable and there is an extended lockdown."

A researcher at Korea Development Institute (KDI), a thank tank under the wing of the finance ministry, echoed a similar view.

Speaking on condition of anonymity, the researcher pointed out that the government's plan to provide discount coupons to the public to boost consumption may not succeed if the COVID-19 situation gets worse.

With more than 14 million people set to benefit, the coupons are aimed at getting people to spend money on hotels, restaurants and other cultural activities that have been hit hard by the pandemic.

The coupons are a part of broader economic recovery measures to be implemented in the second half of this year.

"But who will go outside and use the coupons if you have to risk being infected with the Delta variant?" the KDI researcher asked.

The experts said that the pace of the vaccination drive will be critical to managing the spread of the Delta variant.

The vaccination drive continues to push ahead and the country is aiming to achieve herd immunity by November as it initially planned.

But this projection does not take into account the fact that the Delta variant is rapidly spreading.

"The government will need to ensure that the pace of the vaccination drive is faster than the spread of the Delta variant," Lee said.


Yi Whan-woo yistory@koreatimes.co.kr


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