Korea’s macroeconomic policies under the incoming Park Geun-hye administration have yet to be set, but one unchangeable truth is that they will have to be geared to fight the static global economic markets, the government said on Thursday.
In its 2013 economic policy outline, the Finance Ministry said the country must remain highly vigilant toward future risks posed by the lukewarm economic conditions of the global economy, while also seeking measures to rejuvenate the local markets.
“The U.S. and Chinese economies are expected to pick up at a faster pace next year, but the recovery rate is unlikely to be steep,” the ministry said in a statement.
The International Monetary Fund has put global economic growth at 3.6 percent in 2013, while the OECD outlook is at 3.4 percent. This year, the two organizations expected the world economy to have grown by 3.3 percent and 2.9 percent, respectively.
As an export-dependent economy ― Korea depends on exports ― external conditions are significant factors that sway the markets here.
Despite the concerns over the bleak global outlook, however, the ministry remained upbeat about next year’s economic performance, saying that the Korean economy is likely to grow 3 percent next year, up from the 2.1 percent this year as uncertainties in the global markets subside.
From outside, Korea’s corporate and financial fundamentals are considered strong, officials said, citing the inflow of investment from overseas via the stock markets. Between January and March, foreign investors net bought some 11 trillion won of local stocks. They turned into sellers between April and July, but went back and forth between selling and buying to ultimately become big buyers in December this year.
Facility investment, a key indicator of business conditions as it measures how willing firms are to make investment, was expected to grow by 3.5 percent next year, with the figure depending on how robust exports become.
To offer a stimulus to bolster the economy, the ministry suggested frontloading the budget ― up to 60 percent ― during the first half of the year, while running flexible fiscal policies. However, it’ too early yet to consider a supplementary budget, the ministry said.
Addressing individual markets, the government called for putting on a ceiling on sales prices for newly built housing, while offering more homes for low-price rent.
Up to 320,000 new jobs are to be added to the economy next year, as more women and senior citizens join workforces to bring the employment rate to 59.5 percent, up 0.1 percentage point from this year.
To help capitalize more investment from the private sector, the government said it expects a bigger budget of 186 trillion won, which reflects a 16 trillion won from this year, to offer low-interest loans to small and mid-sized companies next year.
One of president-elect Park Geun-hye’s top policy pledge has been to address the widening disparity between small and larger companies. As a sign of staying true to such promises, Park met small and mid-sized firms and representatives as her first step for shaping economic policies.
On Thursday, she also appointed key posts of the transitional committee that will be operated until Park is official inaugurated in February.
By Kim Ji-hyun (
jemmie@heraldcorp.com)
