Korea Economics Comment:Supplementary budget not a game changer

Korea goes for its third straight year of issuing a supplementary budget, but thesize is short of pushing the fiscal policy stance into expansionary territory. TheMoSF plans to submit a KRW11.2trn extra budget to the National Assembly onWednesday, targeting to create new jobs, as widely expected. The government willfund the new spending mainly from excessive tax revenues and will not tap thebond market. With the ruling party lacking a majority in the parliament, thesupplementary budget will go through heated debate at the parliament. However,the economic impact will be limited, in our view, with fiscal expenditure growth setto slow from 7% in 2016 to 3% in 2017 even if the extra budget is passed.