Finance Minister Choi Kyung-hwan said Friday that the government will focus on structural reforms in key economic sectors next year to improve the fundamentals of the South Korean economy and revive the nation's growth potential.
"The government will increase the efficiency of the public sector and boost the dynamics of the financial industry, to help create a virtuous circle between the financial sector and the real economy," Choi said in a government meeting in Seoul.
He said that he will push for economic restructuring in earnest next year to improve the fundamentals of the economy and sharpen competitiveness.
"To support the reform, the government will make efforts to stimulate domestic consumption and investments and also do its best to manage risks like mounting household debts and waning competitiveness in the key industries," Choi said.
"I know there is a tough road in undergoing restructuring, but we have to go down it," he said. "We don't have much time to repeat the past ways."
Choi's remarks came a few days ahead of the announcement of the government's 2015 economic management plan. It is expected to include the broad policy directions, key agenda and updated growth outlooks for the present and next year.
The minister also asked labor and management to make concessions to improve flexibility in the work market. Choi had earlier made controversial remarks calling for structural reform of the labor market where regular workers are being "overprotected," which received a strong backlash from labor unions.
"The government alone cannot reform the labor market full of conflicting interests," he said. "If the two parties yield a step and reach agreement on labor market reform, the government will strengthen the social safety net to support the move."
After his inauguration in July, Choi took aggressive measures to boost the long-protracted real estate market. His first step was to ease loan-related regulations including debt-to-income (DTI) and loan-to-value (LTV) rules, designed to control the amount of loans for home buyers based on their income and ability to pay back debts.
His intention was joined by the central bank, which had cut the key rates by 0.5 percentage point in the latter half alone and set the rate at a record low of 2 percent. The series of deregulations has shored up the housing market to some extent but has also fueled the country's galloping household debts that pierced 1,000 trillion won (US$905 billion) for the first time in the third quarter.
Experts and international organizations have warned South Korea of the risks of mounting household debts.
In a recent report, the International Monetary Fund (IMF) said that the growing household debts would hurt the country's economic growth and domestic consumption when the United States raises its rate early next year. (Yonhap)
