SEOUL, June 24 (Xinhua) -- Both households and companies of South Korea are expected to face liquidity shortage on the back of an economic fallout from the COVID-19 outbreak, a central bank report said Wednesday.
The Bank of Korea (BOK) said in its biannual financial stability report submitted to the parliament that hundreds of thousands of households are expected to face deficit, due to an increased unemployment for wage workers and a reduced revenue for the self-employed stemming from the coronavirus pandemic.
The number of households of wage and salary workers, who are forecast to endure the economic fallout from the COVID-19 for less than one year, is estimated at 458,000, according to the report.
It indicates that the cited number of households would face deficit within a year owing to the unemployment shock, under which their spending surpasses their holdings of financial assets and face liquidity shortage in a year or less.
The unemployment shock assumes a scenario of the jobless rate hike by 3.7 percentage points for regular employees and by 12.3 percentage points for irregular workers each as seen during the foreign exchange crisis in late 1990s facing South Korea.
The number of households of the self-employed, who can endure the economic fallout for less than a year because of the reduced revenue, is estimated at 301,000.
The total number of South Korean households was 11,450,000 as of 2019. Of the total, households of regular and irregular employees accounted for 54.0 percent and 14.9 percent each, while the self-employed took up 26.4 percent.
Amid the rising worry about economic uncertainty, domestic companies encouraged employees to go on an unpaid leave or be laid off, raising the number of initial jobless claims in recent months.
The number of those how newly applied for job-seeking benefits was 111,000 in May, up 32.1 percent from a year earlier, according to a separate data from the Ministry of Employment and Labor.
The job-seeking benefits are offered by the government to help the unemployed seek jobs, accounting for a majority of unemployment benefits.
The number of regular workers grew 393,000 in May from a year earlier, but those for irregular employees and day laborers tumbled 501,000 and 183,000 respectively.
The number of those who took a leave of absence was 1,020,000 in May, up 685,000 from a year earlier. It topped 1 million for the third consecutive month.
The BOK noted that if the COVID-19 outbreak worsens the labor market situations as seen in the foreign exchange crisis, it would weaken debt-servicing capability for households of salary and wage workers and eventually expand overdue loan.
It forecast that situations would be worse for households of irregular workers, who own fewer financial assets than regular employees.
If the revenue shock is prolonged for households of the self-employed, the eatery and lodging sector would face a higher revenue reduction than other sectors, the BOK warned.
Meanwhile, domestic companies are forecast to face a liquidity shortage as much as 54 trillion won (45 billion U.S. dollars) if the economic fallout from the coronavirus pandemic continues for the whole year of 2020.
The airline industry is expected to be hit hardest as the sector would face as much as 12.7 trillion won (10.6 billion U.S. dollars) of liquidity shortage.
In addition, the eatery and lodging, the leisure services and the shipping industries are predicted to have difficulties in doing business as people refrain from outside activities such as traveling, shopping and eating out.
The global trade slumped as countries conducted lockdowns to prevent the imported COVID-19 spread.
South Korea's export tumbled 23.7 percent in May from a year earlier, keeping a downward trend for three straight months. Enditem
