The government has designated May 6 as a temporary holiday, allowing people to take a four-day break from May 5, which is Children’s Day in Korea.
The designation is intended to boost the economy by stimulating sluggish domestic consumption. The Korea Chamber of Commerce and Industry proposed the idea, as the designation of Aug. 14 as an extra holiday last year had a positive impact on the economy.
Last year, the government allowed people to take Aug. 14 off because Independence Day on Aug. 15, which is a public holiday, fell on a Saturday.
The KCCI estimated the economic impact of the one-off holiday last August at 1.3 trillion won ($1.15 billion). It expects the four-day weekend in May to provide an even greater stimulus to the economy.
The government’s decision is well-advised, given the slowing pace of the economic recovery. In the first three months of this year, Korea’s gross domestic product grew a mere 0.4 percent on-quarter, slowing down from the 0.7 percent expansion in the preceding quarter.
The first-quarter growth figure suggests that economic growth for this year is likely to fall far short of the government’s target of 3.1 percent. In fact, many economic research institutes have already lowered their growth estimates to the 2 percent range.
The weakening momentum is attributable to private spending, which contracted 0.3 percent on-quarter against a 1.4 percent expansion in the previous quarter.
The drop in private spending was due largely to a base effect. In the fourth quarter of last year, the government implemented diverse consumption-boosting measures to prop up the sagging economy.
Now, the government needs to roll out a new stimulus package to prevent the economy from being driven over a “consumption cliff.”
In this regard, it was right that President Park Geun-hye lifted a virtual ban on golf for government officials. During her meeting Tuesday with chief editors of several dozen newspapers and broadcasters at Cheong Wa Dae, Park said she has never banned government officials from playing golf.
To show that golf is not banned for public officials, Finance Minister Yoo Il-ho is to play golf with KCCI president Park Yong-maan and other business leaders on Saturday.
On Thursday, the Finance Ministry announced that it would increase government spending in the first half of the year by 6.5 trillion won to make up for the drop in private spending.
This is the right move, but the government needs to find ways to maintain its spending in the second half of the year. Once corporate restructuring goes into full swing, consumer spending is likely to weaken further due to a rise in unemployment.
