Bolstered by the government’s decision to double its economic rescue package to 100 trillion won ($82.5 billion), coupled with the central bank’s promise of unlimited quantitative easing, South Korea appears to have evaded a financial disaster for now.

But a bigger task awaits, according to experts: preventing the risks stemming from the novel coronavirus from dragging down the real economy.

Officials and experts alike have stressed the need for closer attention to the nonfinancial aspects of the economy, including the job market and steps to prevent businesses from filing for bankruptcy.

“This is a war situation -- it will be too late to regret when companies go bankrupt, people lose jobs and taxes are gone,” Vice Finance Minister Kim Yong-beom said via Twitter.

“All-around financial support is required to keep all businesses afloat,” he added.

On top of that, the financial market is also in a state of stupor, not on the road to recovery, said Kim Hyoung-ryoul, an analyst at Kyobo Securities. It could easily be swayed by a slowdown of the real economy.

“The emergency move on the financial market has been effective so far,” the Kyobo analyst said.

“However, we must be cautious as we are on the brink of a real economy slowdown.”

Small and midsized enterprises and the self-employed are seeing diminished sales due to the pandemic. Korea’s consumer sentiment index hit 78.4 in March, the lowest point in more than a decade, according to data from the Bank of Korea.

The government and the BOK are expected to continue cooperating to stabilize the volatile financial market and prevent the risks from spilling over to the real economy, creating a vicious circle.

The central bank said last week that it will inject an unlimited amount of liquidity into the financial market over the next three months, while expanding its repo operations.

A repurchase agreement, or repo, allows securities to be sold and then repurchased at a later date, serving as short-term borrowing for dealers in government securities.

The liquidity for the next three months is expected to amount to more than 50 trillion won, according to analysts’ calculations based on the nation’s liquidity aggregate, the broadest measure of the money supply.

The projected liquidity is nearly double the amount that the BOK injected into the local market during the 2008 global financial crisis -- 28 trillion won for five months beginning in October that year. This is mainly because the local financial market has grown exponentially over the past decade.

The BOK said Sunday that it plans to provide $12 billion in loans to local banks this week, in a move to further ease the dollar liquidity crunch.

The plan is part of a $60 billion currency swap agreement signed with the US Federal Reserve earlier this month. A related auction will be held Tuesday and the loans will mature in seven days and 84 days, respectively.

In an economy-related meeting Thursday, Vice Finance Minister Kim said global economic indexes reflecting the impact of the coronavirus on the real economy could work as an unfavorable factor for the local financial market.

“Korea’s economic fundamentals and safety net from external risks are relatively strong, but the waves from the global credit crunch could still affect the local financial market,” he said.

The 100 trillion-won economic relief package, announced by President Moon Jae-in on Tuesday, consists of 41.8 trillion won to ease the credit crunch and other pain points in the financial market and 58.3 trillion won to support local companies.

By Jung Min-kyung (mkjung@heraldcorp.com)