{ "title": "Mountains after Mountains: Korea is Containing COVID-19 and Looking Ahead", "publication": "IMF News, April 29, 2021", "sourceUrl": "https://www.imf.org/en/news/articles/2021/04/29/na042921-mountains-after-mountains-korea-is-containing-covid-19-and-looking-ahead", "canonical": "https://www.imf.org/en/news/articles/2021/04/29/na042921-mountains-after-mountains-korea-is-containing-covid-19-and-looking-ahead", "overlayPath": "/en/news/articles/2021/04/29/na042921-mountains-after-mountains-korea-is-containing-covid-19-and-looking-ahead/index.md", "summary": "Over the past year, the Korean government’s actions have been very successful in limiting the severity of the COVID-19 outbreak and lessening its economic impact. ", "authors": [ "Sohrab Rafiq", "Andrew Swiston IMF Asia", "Pacific Department April" ], "publishDate": "2021-04-29", "sections": [ { "heading": "Context and authorship", "content": "- By Sohrab Rafiq and Andrew Swiston, IMF Asia and Pacific Department\n- April 29, 2021" }, { "heading": "Public health response and macroeconomic outcome", "content": "- Korea’s containment strategy featured widespread testing, data-intensive contact tracing, and treatment tailored to the severity of each case.\n- The infection rate was kept below that of its peers.\n- Korea deployed a comprehensive economic response including fiscal support, measures to stabilize financial markets, and steps to ensure ample availability of credit.\n- Real GDP growth in 2020: -1.0 percent.\n- The downturn was the smallest among advanced G-20 economies." }, { "heading": "Recovery pattern and near-term policy stance", "content": "- The economy is recovering quickly, but the pace is uneven across sectors (described as a “K-shaped” recovery).\n- Exports have rebounded, driven by pandemic-induced increases in online activities, supporting business investment.\n- Services and consumption remain below pre-pandemic levels.\n- Authorities have maintained supportive fiscal and monetary policies.\n- Recent additional targeted support approved through a supplementary budget: 0.8 percent of GDP.\n- Given Korea entered the COVID-19 shock with low public debt, this stimulus can be withdrawn gradually over the next few years." }, { "heading": "Financial sector and credit dynamics", "content": "- Korea’s financial system has weathered the COVID-19 shock relatively well, supported by years of sound macro-financial policy management.\n- Among systemically important banks, loan repayment rates are very high, and there are ample capital and provisioning buffers.\n- Korean household debt: over 190 percent of disposable income.\n- Around half of the total stock of SME bank credit (around 22 percent of GDP) has been extended to firms with earnings that are insufficient to cover interest payments.\n- Lending has grown quickly across all sectors since the pandemic outbreak, pushing credit as a percent of GDP further above its trend value.\n- Policy challenge in 2021: sustain credit support until recovery broadens, then proceed with a calibrated withdrawal so support does not impede needed post-COVID-19 reallocation of resources." }, { "heading": "Structural reform priorities for medium-term inclusive growth", "content": "- Korea’s improvement in living standards has slowed and productivity remains below advanced-economy peers.\n- The Korean New Deal (a five-year development strategy) aims to:\n - promote digitalization,\n - accelerate the transition to a low-carbon economy,\n - strengthen the social safety net.\n- Expected benefits: boost productivity in service sectors and reduce inequalities faced by women, youth, and the elderly.\n- Remaining reform agenda items:\n - reduce barriers to entry for new firms,\n - stimulate innovation,\n - tackle remaining labor market rigidities.\n- Policy note: strengthening carbon pricing to provide robust incentives for green investment will be important to achieve the objectives of the green pillar of the Korean New Deal.\n\nSource: IMF News — \"Mountains after Mountains: Korea is Containing COVID-19 and Looking Ahead\", April 29, 2021.\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- assessment\n- Read the press release\n- Korea and the IMF\n- Korea: Overcoming Demographics and COVID-19\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/04/29/na042921-mountains-after-mountains-korea-is-containing-covid-19-and-looking-ahead" } ], "bullets": [ "[Markdown version](/en/news/articles/2021/04/29/na042921-mountains-after-mountains-korea-is-containing-covid-19-and-looking-ahead/index.md)", "[Structured JSON version](/en/news/articles/2021/04/29/na042921-mountains-after-mountains-korea-is-containing-covid-19-and-looking-ahead/index.json)", "[Bundle manifest](/en/news/articles/2021/04/29/na042921-mountains-after-mountains-korea-is-containing-covid-19-and-looking-ahead/bundle-manifest.json)", "Authors: Sohrab Rafiq, Andrew Swiston IMF Asia, Pacific Department April", "Published: April 29, 2021", "By Sohrab Rafiq and Andrew Swiston, IMF Asia and Pacific Department", "April 29, 2021", "Korea’s containment strategy featured widespread testing, data-intensive contact tracing, and treatment tailored to the severity of each case.", "The infection rate was kept below that of its peers.", "Korea deployed a comprehensive economic response including fiscal support, measures to stabilize financial markets, and steps to ensure ample availability of credit.", "Real GDP growth in 2020: -1.0 percent.", "The downturn was the smallest among advanced G-20 economies.", "The economy is recovering quickly, but the pace is uneven across sectors (described as a “K-shaped” recovery).", "Exports have rebounded, driven by pandemic-induced increases in online activities, supporting business investment.", "Services and consumption remain below pre-pandemic levels.", "Authorities have maintained supportive fiscal and monetary policies.", "Recent additional targeted support approved through a supplementary budget: 0.8 percent of GDP.", "Given Korea entered the COVID-19 shock with low public debt, this stimulus can be withdrawn gradually over the next few years.", "Korea’s financial system has weathered the COVID-19 shock relatively well, supported by years of sound macro-financial policy management.", "Among systemically important banks, loan repayment rates are very high, and there are ample capital and provisioning buffers.", "Korean household debt: over 190 percent of disposable income.", "Around half of the total stock of SME bank credit (around 22 percent of GDP) has been extended to firms with earnings that are insufficient to cover interest payments.", "Lending has grown quickly across all sectors since the pandemic outbreak, pushing credit as a percent of GDP further above its trend value.", "Policy challenge in 2021: sustain credit support until recovery broadens, then proceed with a calibrated withdrawal so support does not impede needed post-COVID-19 reallocation of resources.", "Korea’s improvement in living standards has slowed and productivity remains below advanced-economy peers.", "The Korean New Deal (a five-year development strategy) aims to:", "Expected benefits: boost productivity in service sectors and reduce inequalities faced by women, youth, and the elderly.", "Remaining reform agenda items:", "Policy note: strengthening carbon pricing to provide robust incentives for green investment will be important to achieve the objectives of the green pillar of the Korean New Deal.", "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)", "[PRESS CENTER](http://presscenter.imf.org/)", "[assessment](https://www.imf.org/en/Publications/CR/Issues/2021/03/24/Republic-of-Korea-2021-Article-IV-Consultation-Press-Release-Staff-Report-Staff-Statement-50306)", "[Read the press release](https://www.imf.org/en/News/Articles/2021/03/24/pr2181-korea-imf-executive-board-concludes-2021-article-iv-consultation-with-republic-of-korea)", "[Korea and the IMF](https://www.imf.org/en/Countries/KOR-)", "[Korea: Overcoming Demographics and COVID-19](https://www.imf.org/en/Publications/WP/Issues/2021/03/26/Koreas-Growth-Prospects-Overcoming-Demographics-and-COVID-19-50261)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2021/04/29/na042921-mountains-after-mountains-korea-is-containing-covid-19-and-looking-ahead/index.md", "json": "/en/news/articles/2021/04/29/na042921-mountains-after-mountains-korea-is-containing-covid-19-and-looking-ahead/index.json", "bundleManifest": "/en/news/articles/2021/04/29/na042921-mountains-after-mountains-korea-is-containing-covid-19-and-looking-ahead/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T00:21:07.187Z" }