The Finance Ministry is reportedly considering revising its outlook for 2013 GDP growth up from the current projection of 2.3 percent in reflection of possibly positive effects from the supplementary budget and a cut in the benchmark interest rate.
While the ministry lowered the economic growth projection from 3 percent to 2.3 percent in March, government officials have worried that the state-led gloomy stance is hampering investor and consumer sentiment.
“In late June, contemplating policy effects and economic conditions, the government will unveil the revised figure in its economic outlook for the second half,” the Finance Ministry said in a statement on Sunday.
Though the concrete figure has yet to be specified, market insiders forecast that the ministry is expected to revise up the outlook by about 0.4-0.5 percentage point.
The Finance Ministry expects that the supplementary budget, which was fostered in April, will have the effect of raising GDP growth by 0.3 percentage point.
In an apparent response to the government’s drive to boost the economy, the Bank of Korea lowered the benchmark interest rate by 25 basis points to 2.5 percent per year.
The current figure of 2.3 percent is even lower than projections from public and private research institutes including Samsung Economic Research Institute, which hover between 2.5 and 2.9 percent, according to the Ministry of Trade, Industry and Energy.
The BOK and the U.S.-based International Monetary Fund predicted 2.6 and 2.8 percent growth, respectively, despite their downword revisions.
Finance Ministry officials stressed that the 2.3 percent growth was not the government’s target but its “baseline” growth for this year after taking into account an expected revenue shortfall.
During a recent conference hosted by Herald Corp., a ministry director general said the nation’s GDP could grow around 2.7 percent for 2013 with an extra budget of nearly 20 trillion won ($18 billion), including 2 trillion won in public funds.
The supplementary budget, of which 12 trillion won will be spent for the shortfall in state revenue, will also create 300,000 jobs toward the latter half of this year, the officials said.
By Kim Yon-se (
kys@heraldcorp.com)
