The South Korean finance minister said Tuesday that the government will announce a package of fiscal policies that would sufficiently stimulate the economy in the second half amid growing concerns over further economic downturn.
Asia's fourth-largest economy has been in the doldrums since the beginning of the year as faltering exports, the key economic driver, weigh heavily on the entire economy, especially production.
Finance Minister Yoo Il-ho (Yonhap)
The latest data showed that South Korea's industrial output fell 2.8 percent in April from a year ago, posting negative growth for the second consecutive month and widening its downward pace from March.
Earlier this month, the Bank of Korea unexpectedly cut the key rate to a record 1.25 percent for the first time in 12 months in an apparent move to fuel economic growth in the coming months.
"We are considering sufficient fiscal policies," Finance Minister Yoo Il-ho said in a Seoul meeting with financial businesses. "The government is making full efforts to revitalize the economy. The fiscal side will lend support to it."
Global organizations such as the International Monetary Fund nd the Organization for Economic Cooperation and Development cut South Korea's growth forecast to 2.7 percent each, while the state-run think tank Korea Development Institute lowered its prediction to 2.6 percent.
The IMF last week called for a more aggressive fiscal intervention into the economy, saying, "Speedy implementation of additional fiscal stimulus should be a priority and should be complemented by monetary easing."
Yoo said the government will announce the economy-boosting plan before long, but was vague on details to draw up an extra budget for this year to reach the growth target of 3.1 percent.
Experts anticipate that the government will lower the goal when it unveils the strong stimulus plan later this month. (Yonhap)