Finance Minister Hong Nam-ki said Friday the government will ramp up its effort to support small merchants next year in a bid to help them tide over the economic fallout of the COVID-19 pandemic.

Hong said the government will also prioritize strengthening social safety nets in 2022 in a bid to narrow deepening income gaps caused by the pandemic.

"The government will focus on providing multilayered support to small merchants to help them overcome economic difficulties and make a leap forward," Hong said in his message for the new year.

The government plans to swiftly provide compensation to merchants who have suffered business losses due to the stricter antivirus measures. It has set aside 3.2 trillion won ($2.7 billion) of the budget for the loss compensation plan for next year.

To ease their suffering, the government has decided to provide compensation for losses caused by COVID-19 for the first quarter in advance. Around 550,000 self-employed people and merchants will receive 5 million won each first, and the actual assessment of their financial damage and compensation will be conducted later.

The finance ministry forecast Asia's fourth-largest economy will grow 3.1 percent next year after the estimated growth of 4 percent for 2021.

The government sharply revised up its 2022 inflation outlook to 2.2 percent from its earlier forecast of 1.4 percent. For all of 2021, consumer prices grew 2.5 percent on-year, the fastest gain in 10 years. (Yonhap)