Gyeonggi Residents Spent Additional 80,000 Won After Receiving 100,000 Won in Disaster Relief Funds

[Suwon Ilbo=Reporter Park No-hun] Analysis results show that government emergency disaster relief funds and Gyeonggi Province basic disaster income (hereinafter disaster relief funds) had a consumption inducement effect of up to 185,566 won per capita for Gyeonggi residents, positively impacting small merchants and local street-level commerce, which are economically vulnerable groups.

On the 23rd, Gyeonggi Province announced that after obtaining consumption data totaling 2.0177 trillion won and approximately 98 million transactions of basic disaster income consumed from April to August from 14 credit card companies that signed agreements regarding disaster income payments, it conducted characteristic analysis by gender, age, industry type, region, and merchant sales scale, producing these results.

Previously, as an economic quarantine policy in response to COVID-19 spread, Gyeonggi Province, following the universal provision principle of local currency disaster basic income set by Governor Lee Jae-myung, distributed 100,000 won per capita of Gyeonggi Province basic disaster income starting April 9 without any income restrictions or conditions.

The central government also distributed emergency disaster relief funds starting May 11, ranging from 400,000 won for single-person households to 1 million won for households of four or more.

According to the analysis, from April 12 to August 9 of this year, the total amount distributed as central government emergency disaster relief funds and Gyeonggi Province basic disaster income was 5.119 trillion won.

April 12 was the date disaster income distribution began, and August 9 was the date the final disaster income consumption amount (98.3% usage completion) was tallied, which added one week for data processing after the credit card and local currency form disaster income usage deadline of July 31.

During the same period, total consumer expenditure in Gyeonggi Province was 78.7375 trillion won, an increase of 7.7444 trillion won compared to 70.9931 trillion won during the same period in 2019.

Therefore, an additional 2.6254 trillion won in consumer expenditure occurred beyond the 5.119 trillion won actually distributed.

This corresponds to 0.51 times the total disaster relief fund amount of 5.119 trillion won, and the province analyzed that it induced a 1.51 times consumption effect relative to the disaster relief funds distributed to residents.

The province subsequently estimated the case where disaster relief funds were not distributed and compared it with actual consumption after disaster relief funds were distributed to examine the consumption inducement effect of the disaster relief funds.

To this end, the province analyzed consumption trends from February 16 of this year, when consumption sharply declined due to COVID-19 spread, to April 12, when central government emergency disaster relief funds and Gyeonggi Province basic disaster income distribution began.

As a result, it discovered that consumption decreased by 266.5 billion won compared to the same period of the previous year.

The province created a predictive model under the assumption that this consumption decline trend could continue through August 9 if emergency disaster relief funds were not distributed, and estimated consumption during that period.

According to the analysis, the estimated consumption amount between April 12 and August 9 was 69.2384 trillion won, which was 9.4991 trillion won less than the actual consumption of 78.7375 trillion won during the same period.

Using the same calculation method, an additional 4.3801 trillion won in consumer expenditure occurred beyond the 5.119 trillion won actually distributed.

This corresponds to 0.85 times the total disaster relief fund amount of 5.119 trillion won, and the province determined it induced a 1.85 times consumption effect relative to the disaster relief funds distributed to residents.

Ultimately, the province's analysis shows that when 100,000 won in disaster relief funds were distributed per Gyeonggi resident, residents spent up to 185,000 won in consumption.

Additionally, according to analysis by merchant sales scale, 967.8 billion won (48%) was consumed at merchants with annual sales under 300 million won, 267.5 billion won (13%) at merchants with 300 million to under 500 million won, 397.3 billion won (20%) at merchants with 500 million to under 1 billion won, and 385.1 billion won (19%) at merchants with over 1 billion won in annual sales.

By commercial district type, 1.4029 trillion won (70%) was consumed in local street-level commerce, 163.7 billion won (8%) in traditional markets, and 451.1 billion won (22%) in commercial facilities. The usage rate in traditional markets and local street-level commerce reached 78%.

In other words, basic disaster income was consumed most at small merchants with under 300 million won in annual sales and small shops in local street-level commerce, and the analysis confirmed that merchants with relatively smaller sales scales received greater benefits.

Lim Moon-young, Director of Future Growth Policy at the Province, stated, "This analysis is the first to analyze the consumption inducement effect of disaster relief policies implemented by the central government and the province based on actual consumption data," and added, "We confirmed that the effects of basic disaster income were positive for economically vulnerable groups including small merchants with under 300 million won in sales and markets and local street-level commerce. We hope that follow-up research reflecting various factors including seasonal factors and quarantine administrative performance will continue."