SEOUL (Reuters) -South Korea’s government has prepared financial support for small businesses struggling due to high interest rates, President Yoon Suk Yeol said on Wednesday, as it revised up its forecast for this year’s economic growth.
“Small businesses are still in difficult conditions. Amid persistently high interest rates, their interest burden has increased, while wage and rent costs are also rising,” Yoon said in a speech ahead of the government’s bi-annual economic policy announcement due later on Wednesday.
The government has prepared a total of 25 trillion won ($18 billion) worth of support measures, Yoon said.
South Korea’s central bank extended its policy pause for an 11th straight meeting in May, keeping rates at a 15-year high, as it reiterated its warning on inflationary risks.
Asia’s fourth-largest economy grew in the first quarter at the fastest pace in two years, thanks to strong exports, but there are worries that the recovery might be uneven as high interest rates squeeze domestic demand.
The announcement will also include tax benefits for companies raising dividend payouts as part of the government’s “Corporate Value-up Programme”, which is aimed at boosting the domestic stock market.
Yoon said consumer prices are stabilising in Asia’s fourth-largest economy as headline inflation has slowed for a third straight month while foreign investment inflows look solid.
Following Yoon’s remarks, finance minister Choi Sang-mok said the ministry raised its forecast for this year’s economic growth to 2.6% from 2.2% previously.
($1 = 1,388.9400 won)
This post is originally published on INVESTING.
