FX.co ★ South Korea Plans Second Extra Budget to Tackle Sluggish Growth

South Korea is set to announce a second supplementary budget on Thursday, designed to bolster its sluggish economy. This follows a previous package of 13.8 trillion won ($10.13 billion) approved in May. The latest proposal, scheduled for discussion at a cabinet meeting, is intended to support citizens facing challenges from U.S. tariffs and decreased consumer demand. Since assuming office on June 4, President Lee Jae-myung has been a proponent of expansionary fiscal measures and direct financial assistance to stimulate consumer spending. The central bank recently revised its 2024 growth projection downwards, from 1.5% to 0.8%. Acting Finance Minister Lee Hyoung-il indicated that the budget would include initiatives to address the rising cost of food. Additionally, the government has decided to prolong oil tax reductions until August, in response to escalating global prices fueled by Middle East tensions. Other measures encompass increasing import quotas and providing financial assistance to manage food inflation, which Lee noted is causing significant distress. Furthermore, tax incentives on vehicle purchases have been extended through the end of the year to support the automotive industry.