South Korea approves welfare-focused budget

Updated 02 January 2013

South Korea approves welfare-focused budget

SEOUL: South Korea's Parliament yesterday approved a revised government budget for 2013 that focuses more on welfare in response to the next president's pledge to increase social spending.
The legislature ratified total spending of 342 trillion won ($ 319.46 billion), down from the government's proposal of 342.5 trillion.
It marked the first time in South Korea's history that a budget bill has been approved after the beginning of the fiscal year, which is the same as the calendar year.
The revised budget calls for cutting defense expenditure while spending more on social welfare and public construction projects.
Incoming President Park Geun-Hye, who takes office next month, has promised to expand free child care, subsidize college tuition fees and increase support for the poor.
Welfare spending this year will reach about 100 trillion won, higher than the government's proposal of 97 trillion won.
Rival parties had pushed for a bolder fiscal policy to stimulate the economy but reached a deal with the government to save any such measures for the future.
The Finance Ministry has delayed its plan to achieve a balanced budget by a year until 2014. The country's overall sovereign debt was estimated at 34 percent of gross domestic product in 2012.
Meanwhile, South Korea's trade surplus in 2012 shrank 7.1 percent to $ 28.6 billion in 2012, data showed yesterday, as exports were hit by shrinking demand in the key European market.
Overseas shipments fell 1.3 percent to $ 548.2 billion last year, while imports slipped 0.9 percent to $ 519.5 billion, the Ministry of Knowledge Economy said.
The 2012 trade surplus figure is down from $ 30.8 billion in 2011 and well off the $ 41.2 billion in 2010, it said.
In December alone, exports fell 5.5 percent from a year ago to $ 45.1 billion and imports retreated 5.3 percent to $ 43.07 billion.
Shipments to Europe in 2012 plunged 12.5 percent year-on-year to $ 47.6 billion, while exports to top destination China, which suffered a slowdown in growth during the year, fell 0.1 percent to $ 130 billion.
The numbers come a day after official figures showed inflation slowed to a four-month low of 1.4 percent in December, giving the central bank leeway to loosen monetary policy to boost economic growth.
Bank of Korea policymakers left the key interest rate unchanged at 2.75 percent in a meeting last month, after trimming it twice throughout the year.
South Korea's economy expanded at its slowest pace in three years in the three months to September, hit by falling demand overseas, with Europe gripped by a debilitating debt crisis. The government has warned that 2013 will likely be equally tough.


Gulf economies to take coronavirus exports hit says S&P

Updated 17 February 2020

Gulf economies to take coronavirus exports hit says S&P

  • S&P expects oil prices to remain at $60 per barrel in 2020 and decline to $55 from 2021
  • The ratings agency expects the impact on the banking sector to be low, with little direct exposure to Chinese companies

LONDON: Gulf states already hurt by a weak oil price could reap further economic pain from the impact of the coronavirus on their exports, S&P Global Ratings warned on Monday.

The ratings agency believes there is a risk that the economic impact of the virus could increase unpredictably with implications for overall economic growth, the oil price and the creditworthiness of some companies. Still, its base case scenario anticipates a limited impact for now.

“Given the importance of the Chinese economy to global economic activity, S&P Global Ratings expects recent developments could weigh on growth prospects in the GCC, already affected by low oil prices and geopolitical uncertainty,” it said in a report.

Although the rate of spread and timing of the peak of the new coronavirus is still uncertain, S&P said that modeling by epidemiologists indicated a likely range for the peak of between late-February and June.

Notwithstanding the spread of the virus, S&P expects oil prices to remain at $60 per barrel in 2020 and decline to $55 from 2021.

It sees the biggest potential impact on regional economies to be felt in terms of export volumes. S&P estimates that GCC countries send between 4 percent and 45 percent of their exported goods to China, with Oman being the most exposed (45.1 percent) and the UAE the least exposed (4.2 percent).

Beyond the trade of goods, the Gulf’s hospitality sector could also feel the effect of reduced tourist arrivals with hotels and shopping malls likely to suffer. The impact could be further amplified because of the high-spending nature of Chinese tourists.

On-location spending by Chinese tourists is the fourth largest in the world at $3,064 per person, according to Nielsen data. About 1.4 million Chinese tourists visited the GCC in 2018 with expectations of that figure rising to 2.2 million in 2023, and with the UAE as the main destination.

Chinese passengers also accounted for 3.9 percent of passengers passing through Dubai International Airport in 2018.

S&P said that if the effect of the new coronavirus is felt beyond March, the number of visitors to Expo 2020 in Dubai could be lower than expected.

The ratings agency expects the impact on the banking sector to be low, with little direct exposure to Chinese companies.