South Korea is ramping up its response to the economic challenges posed by the prolonged Middle East crisis, with Finance Minister Koo Yun-cheol outlining a series of measures ranging from releasing strategic reserves to providing cash assistance for households.

Government Response to Supply Chain Disruptions

According to Yonhap News Agency, Koo announced on Friday that the government aims to release public urea and urea solution reserves later this month to proactively address supply shortages caused by the crisis. The move comes as the conflict, which began in late February following U.S. and Israeli strikes on Iran, has effectively shut down the Strait of Hormuz, a critical shipping route for global energy and raw materials.

In a related development, the government has designated seven basic petrochemical products as crisis items to prevent supply instability and hoarding, as reported by Yonhap. This includes measures to stabilize the supply of naphtha, a key feedstock for the petrochemical industry, as well as health care products and daily necessities.

Koo stated that the government will "swiftly address corporate difficulties arising from supply chain instability" and will closely monitor the entire process from raw material procurement to production and distribution.

Economic Relief and Fiscal Measures

To ease the burden on households, the government has implemented a 6.1 trillion-won (approximately $4.12 billion) cash assistance program targeting the bottom 70 percent of income earners, according to Yonhap. This is part of a supplementary budget recently passed through the National Assembly.

Additionally, the government has rolled out various measures to mitigate the energy crunch, including a fuel price cap and restrictions on vehicle use in the public sector. Koo has also instructed relevant ministries to swiftly execute the extra budget and to actively identify and utilize policy tools that do not require budget spending, such as financial, tax, and regulatory measures.

Call for International Cooperation

At the Group of 20 (G20) Finance Ministers and Central Bank Governors Meeting held in Washington, Koo urged major economies to work together to bolster global supply chains and reinforce economic resilience. He emphasized that the Middle East crisis has heightened uncertainty in the global economy and financial markets, potentially acting as another constraint on economic growth.

"Countries should limit spillover effects on the real economy through swift policy action and close international coordination," Koo said, as quoted by Yonhap. He also highlighted the need to explore ways to secure global supply chains and support the recovery of the world economy.

In bilateral talks, Koo met with his Polish counterpart to discuss the impact of the conflict on energy supply chains and ways to strengthen cooperation. He described the current situation as a "quasi-wartime economic situation" and outlined Seoul's policy responses, including price caps on petroleum products.

Monitoring and Future Outlook

The government has established a hotline for relevant ministers to share real-time information and respond swiftly to any developments. Koo has also emphasized the need to swiftly devise energy supply management plans, such as expanding alternative power generation and promoting energy conservation.

As the crisis continues, the government remains committed to closely monitoring key supply chains and inflation-related items. Koo stated that the government will "firmly maintain an emergency economic response system until the end of the war becomes clear."

All information in this article is based on reports from Yonhap News Agency, which has provided consistent coverage of Finance Minister Koo's statements and the government's actions.