South Korea's Bold Budget Boost: Battling Trade Wars and Domestic Challenges

South Korea has proposed a supplementary budget of 12.2 trillion won to combat economic risks from global trade conflicts and domestic political issues. Key allocations include support for auto and chip sectors, small businesses, and AI industry, while increasing government bonds and foreign exchange stabilization bonds.

In a bid to counter rising threats to its economic growth, South Korea's government on Friday unveiled a supplementary budget plan of 12.2 trillion won ($8.60 billion). The initiative aims to mitigate the repercussions of a global trade war and domestic political uncertainty on the nation's economy.

This fiscal blueprint arrives amid recent efforts to shore up critical sectors like automotive and semiconductors, which have significantly contributed to South Korea's export surge, particularly to the U.S. These industries now face potential setbacks due to American tariffs.

Money will be directed towards various strategic areas, including 2.1 trillion won for trade risk responses and 1.8 trillion for AI development. The central bank signals readiness to cut interest rates, acknowledging the economic challenges under President Trump's tariff policies.

(With inputs from agencies.)