The government on Monday expressed confidence that the South Korean economy will rebound in 2020, dispelling market concerns on the various growth forecasts.
It also assessed that the latest mortgage loan restrictions have already been effective in reining in the overheated housing market.
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Deputy Prime Minister and Finance Minister Hong Nam-ki speaks Monday in a press briefing at Sejong Government Complex. (Yonhap) |
“I am confident that our economy may rebound next year and I am not just saying this out of personal sentiments or wishful thinking,” said Deputy Prime Minister and Finance Minister Hong Nam-ki, in a year-end press briefing held at Sejong Government Complex.
Citing key figures such as the Purchasing Managers’ Index and the OECD Composite Leading Indicator, the top fiscal policymaker claimed that the global economy would recover next year.
“What counts is the timely policy support (by the government) and cooperation by the corporate sector,” the minister said, vowing full-fledged and thorough policy responses to upcoming recovery signals.
When asked about the government’s growth forecast of 2.4 percent for next year -- higher than market estimates -- Hong dispelled the market concerns. The Bank of Korea and the state-run think tank Korea Development Institute, along with the Organization for Economic Cooperation and Development have estimated a growth rate of 2.3 percent, while the International Monetary Fund has forecast 2.2 percent.
“Some worry about the forecast of 2.4 percent (for 2020), but if I could, I would raise the target to the level of the growth potential,” he said.
According to the BOK, the potential growth pace for Asia’s fourth-largest economy in 2020 is in the 2.5-2.6 percent range.
“Not only should we see to it that (the actual economic growth pace) catches up with the potential growth level, but also lay the foundation to elevate the potential growth in the near future,” he said.
Addressing the follow-up measures of the government’s latest real estate regulations, the fiscal chief said that no immediate actions are currently being considered, adding that additional moves could be possible, if needed.
“Since the government announced additional comprehensive measures to stabilize the real estate market (on Dec. 16), the drastic housing price bubble has slowed down to a certain extent,” Hong said.
While the average apartment prices in Seoul fell back to the November level, the corresponding figure for the so-called Big Four -- the affluent Gangnam-gu and neighboring three districts -- regressed to its October price level, according to government data.
“(The latest measures) have especially impacted expensive houses, which we expect to spread to the lower price groups over time.”
The latest regulations, which marked the 17th real estate-related set of measures by the incumbent Moon Jae-in administration, mostly focused on tightening loan conditions. In case of apartments priced 1.5 billion won ($1.3 million) or more, mortgage loans were also altogether banned.
“Whereas the Sept. 13 measures (announced in 2018) took about nine weeks to show results, the latest measures seem to be working faster,” the minister said.
“Even experts (in the private sector) evaluate that (the latest measures) will contribute to market stabilization by tacking speculative buying.”
The financial chief’s positive appraisal of the housing price regulations was in contrast to the persisting market anxiety and some of the latest economic statistics.
The Bank of Korea data showed last week that housing prices are forecast the hit the highest level in 15 months in December, prolonging the uptrend for nine months straight.
“What has burdened me over my past year as deputy prime minister is that the private sector has not picked up as much vigor as expected, despite all the dedication and passion (of the government),” Hong said.
“The top priority task for next year is therefore to achieve economic revitalization by all means.”
By Bae Hyun-jung (
tellme@heraldcorp.com)
