The Ministry of Strategy and Finance said that the Korean economy would be able to achieve a trend of 4 percent growth should it swiftly put its stimulus package and fiscal policy into action.
It said Korea’s gross domestic product could grow around 2.7 percent for 2013 with an extra budget of nearly 20 trillion won, including 2 trillion won in public funds.
“The government’s recent economic measures signify its commitment to overcome the low-growth trap in which Korea has been growing below 1 percent over the last seven straight quarters,” said Choi Sang-mok, director of the ministry’s economic policy bureau, at a Herald Corp. conference for the foreign business community.
Choi Sang-mok, director of the Economic Policy Bureau at the Finance Ministry, speaks about the new government’s major economic policies. On the right is David-Pierre Jalicon, chairman of the French Korean Chamber of Commerce and Industry. (Kim Myung-sub/The Korea Herald)
The supplementary budget, of which 12 trillion won will be spent for the “significant” shortfall in state revenue, will be able to add more than 2 percentage points to the country’s GDP growth, as well as create 300,000 jobs toward the latter half of this year, the ministry said.
The director added that some changes would be made to the stimulus package before it passed through the National Assembly. However, both opposition and ruling party lawmakers were currently at the same level of understanding with the government on the importance of the budget and other measures aimed at reviving the economy in the short term, he said.
The Finance Ministry recently forecast Korea’s 2013 growth at 2.3 percent, down from its initial projection of 3 percent, with job creation of 250,000, down from 320,000.
Choi stressed that the 2.3 percent growth was not the government’s target but its “baseline” growth for this year after taking into account expected revenue shortfall, which the Bank of Korea did not count for its revised growth projection of 2.6 percent.
He added that this was one of the reasons there were differences in growth projections among organizations such as the central bank and the International Monetary Fund. The IMF revised down Korea’s growth projection from 3.2 percent to 2.8 percent.
Beyond the differences, he said, the Finance Ministry and the Bank of Korea saw eye to eye on the economic difficulties they faced and the need to overcome them with such policies.
By Park Hyong-ki (
hkp@heraldcorp.com)