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The Ministry of Strategy and Finance (MOSF) revised the Korean economy’s growth outlook for this year upward from 2.3 percent to 2.7 percent. The number of employed workers is forecast to increase from 250,000 to 300,000 and the current account is expected to reach USD 38 billion.
The MOSF announced that it plans to overcome low growth with aggressive macroeconomic policies and reinforced risk management in the second half of this year.
Last week, the MOSF released the Basic Direction of Economic Policy for the Second Half which includes ① reaching economic growth over 3 percent, ② strengthening risk management, ③ easing the burden on the working class, ④ implementing a roadmap to achieve 70 percent employment, ⑤ laying a foundation for the creative economy, ⑥ making economic democratization a priority, ⑦ financing national priorities and ⑧ policy evaluation based on people, field and performance.
The MOSF will first promote aggressive macroeconomic policies aiming at 3 percent growth in the second half of this year.
It will facilitate its budget, which has been secured as a revised supplementary budget in the third quarter. The investment of public agencies will be increased from KRW 52.9 trillion to KRW 53.4 trillion, focusing on power plant facilities and social overhead capital (SOC).
Monetary and credit policies of which the Bank of Korea is in charge will also become more flexible. Limits and recipients for credit loans will be adjusted, and market stabilization efforts will be strengthened for herding behaviors in the foreign exchange market due to external factors.
Risk management and responses will also be reinforced.
An early warning system will be in operation and customized response plans to the foreign exchange market and foreign exchange volatility will be complemented to apply macro prudentiality measures. To prevent risks from becoming a threat to the system, the monitoring of marginal companies in vulnerable businesses will be enhanced and real economic uncertainty will be eased by the restructuring of insolvent companies.
To lessen the burden on citizens, improvement measures for the logistics structure of marine and industrial products will be introduced and the market price monitoring system will be strengthened.
A creative economy will be realized through improved institutional infrastructure and the service sector.
To minimize discrimination between the manufacturing and service sector, more taxation support will be provided to the service sector. Also, knowledge-intensive businesses with advanced technology will be able to receive financial support. Measures to build the competitiveness of the service sector, including tourism and software, will be introduced this month.
Economic democracy will be promoted based on priority. Unfair practices will be the first priority while class-action suits and the right of individuals to request prohibition will be reviewed thoroughly before implementation.
Source: Newsis (June 27, 2013)
** This article was translated from the Korean.