Deputy Prime Minister and Finance Minister Hyun Oh-seok said that Korea was able to achieve growth of 2.7 percent this year and will hit 3.9 percent next year as projected last June.
In a state audit by the Strategy and Finance Committee of the National Assembly on Thursday, the finance minister said that the Korean economy was on a recovery path toward its projections, based on positive signs from various indices.
“Industrial production, employment and exports showed significant quarterly patterns that point to an economic recovery. Furthermore, economic sentiment is improving,” Hyun told committee lawmakers.
A policy mix of fiscal and monetary stimulus implemented in the first half of this year would take effect on the market some time in the fourth quarter of this year or the first half of next year, he said.
This would further help Asia’s fourth-largest economy meet its yearly growth projections, the finance minister added.
The Bank of Korea also noted that the effects of its rate cut in May, aimed at lending a hand to the government’s fiscal stimulus to spur growth, were expected to be seen toward the end of this year, maintaining its initial growth forecast of 2.8 percent in 2013.
The central bank, however, recently cut its 2014 outlook from 4 percent to 3.8 percent, after taking the International Monetary Fund’s Korean revision into account. The IMF lowered its growth forecast for Korea from 3.9 percent to 3.7 percent on expectations of weaker global demand in 2014.
Hyun reiterated the incumbent government’s stance of securing tax revenue without any rate increases.
“It is not considering any tax increases such as value-added tax, but will secure tax revenue by reducing the number of tax exemptions and normalizing the underground economy,” he told the National Assembly committee.
Some securities firms also gave a positive outlook for the nation’s economic growth next year by revising up their estimates early this week.
Samsung Securities raised its 2014 estimate to 3.2 percent from its earlier projection of 2.9 percent.
Hi Investment & Securities Co. also made a similar upgrade. It revised up its 2014 estimate to 3.4 percent from 3 percent.
By Park Hyong-ki (
hkp@heraldcorp.com)
