South Korea is mulling a second extra budget as the trade-reliant economy is widely expected to shrink in the first quarter due to the broad economic fallout from the coronavirus pandemic.

Talks of a second extra budget are already in the works, following the 11.7 trillion won ($9.17 billion) bill executed last week. The bill was immediately followed by the country’s 50-trillion-won emergency package to assist small businesses struggling from the coronavirus outbreak.

President Moon Jae-in described last week’s spending as “not the end but the beginning” and opened the possibility of “second or third additional measures if the crisis persists,” hinting at an additional supplementary budget.

Finance Minister Hong Nam-ki also said another extra budget would be considered in future emergency financing plans.

The new budget bill, if passed, would be Korea’s first back-to-back supplementary budgeting in 17 years. Talks are expected to gain traction after the April 15 general elections.

Korea is going all out to stave off a potential recession, a fear looming large in other countries as well.

According to the latest Bloomberg survey of 14 economists, the Korean economy is expected to contract 0.9 percent in the first quarter compared with the previous three months.

Nomura Securities was the most pessimistic, predicting a 3.7-percent slump in Korea’s first-quarter growth. Oxford Economics forecast Korea’s gross domestic product to shrink 1.4 percent, with Barclays and JPMorgan anticipating a 1.3-percent decline.

These are grimmer than the Bank of Korea estimates released last month, which expected Korea’s first-quarter GDP to contract 0.4 percent.

Economists expect the virus’s global spread to deal an especially heavy blow on the Korean economy given its heavy dependence on exports. The virus-hit countries such as China and the U.S. that are Korea’s two biggest trading partners are already suffering from fast-rising unemployment rates and plunging consumer spending, boding ill for Korea’s export.

Hong Sung-il of the Korea Economic Research Institute said the coronavirus is likely to take a huge hit on Korean exports in March, and that this would be aggravated in the coming months by the existing border restrictions. Korea currently faces entry bans or tightened entry controls from 175 countries.

By Yang Yeon-ho, Song Min-geun and Kim Hyo-jin

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