South Korea unveils "timely" fiscal stimulus package

Come to save the besieged economy.

According to BBVA, the government unveiled its long-anticipated supplementary budget, worth $15.4 billion, or 1.3% of GDP. According to the Ministry of Finance it will raise the 2013 fiscal deficit to 1.8% of GDP, from the 0.3% deficit previously planned, and raise GDP growth by 0.3% in 2013. BBVA added that the stimulus aims to reinvigorate growth (which fell to a disappointing 1.5% y/y in Q4 2012) through new job creation, raising consumer confidence, and support for regional economies.

"The stimulus is timely, as the Korean economy remains under pressure from sluggish external demand, the weakening Japanese Yen, and tensions with North Korea. We expect the Bank of Korea to cut interest rates in the coming months, after remaining on hold for the past 6 months," BBVA said.