South Korea eyes early herd immunity to fuel economic growth

[SEOUL] South Korea may achieve herd immunity "significantly" earlier than it plans, with a faster-than-expected economic expansion poised to bring jobs back to pre-pandemic levels in several months, Acting Prime Minister Hong Nam-ki said.

The country's November target of reaching herd immunity could be moved up if manufacturers honour their supply deals, Mr Hong said Wednesday in a press briefing.

"I'd rather be cautious than say the exact timing, but we'll do our best to move up the November target." South Korea's economic growth beat estimates in the first quarter, helping the country join China in surpassing the pre-pandemic size of its economy.

Still, consumption has trailed the recovery in exports and investment, and the slow pace of vaccinations remains the biggest hurdle to revitalising domestic activity.

The country has led a relatively successful quarantine campaign against the coronavirus, but has lagged behind other developed nations in administering shots for its people. Persistent Covid outbreaks and social distancing restrictions have meant the job market has yet to heal.

Investment spurred by semiconductor and vehicle exports helped the economy recover last quarter, said Mr Hong, who also serves as finance minister. Still, it will take months before jobs return as well, he added. Mr Hong cited previous post-crisis cases when it took three to five months for the jobs recovery to materialise.

Consumption may also "explode" on pent-up demand once the pandemic subsides, Mr Hong said.

"The containment of local outbreaks is the biggest factor in the economy's rebound," he said, estimating that 0.8 per cent growth in each of the remaining quarters would allow the economy to expand more than 4 per cent for the year. The government currently sees a mid-to-upper 3 per cent economic expansion in 2021.

Asked whether the country may be relying too heavily on semiconductors for growth, Mr Hong said the direction for developing the technology further beyond memory chips is "unmovable" and that the importance of the industry will outweigh concerns about over-reliance.

BLOOMBERG