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(News Focus) S. Korea emphasizes price stability over economic growth
SEOUL, June 30 (Yonhap) -- The main focus of South Korea's economy management plan unveiled Thursday is to alleviate the suffering of low and mid-income earners, who still remain sidelined from the benefits of the ongoing economic rebound, experts said.

   Tackling inflation, creating jobs and tightening the nation's social safety net for the underprivileged are among the priorities emphasized in the economy management plan for the second half of this year.

   In an apparent focus shift, the government also lowered its growth outlook for this year from 5 percent to 4.5 percent, citing higher oil prices and other lingering uncertainties. Instead, it put more emphasis on price stability among other things, saying that it will keep its "belt-tightening" fiscal stance down the road.

   "The focal point of the latest economic management plan is to tackle inflation. The downward revision of the economic growth can also be understood as our strong will to bring inflation down," Finance Minister Bahk Jae-wan told reporters in a press briefing.

   The "price-stability-first" policy comes after a long-held stance that economic growth is the No. 1 welfare policy as it could lead to more jobs and more income.

   The changed stance also underlines growing concerns among policymakers that the runaway inflation could undercut the nation's economic recovery by dampening consumer spending.

   South Korea has been gripped by rising inflation, fueled by surging oil and commodity prices in the international markets. Against this backdrop, the government earlier this year announced its "war" against inflation.

   Ever since, it has unveiled diverse measures such as easing import taxes on basic goods, unloading its stockpiles of agricultural products and cracking down on price-rigging in the corporate sector that it fears could lead to a rise in consumer prices.

   But the nation seems to be losing the battle as consumer prices remain stubbornly high. In May, South Korea's consumer prices jumped 4.1 percent from a year earlier, staying above the government's earlier target of 4 percent for the fifth straight month.

   In its economic management plan, the government hiked its 2011 inflation target to 4 percent from the previous 3 percent, indicating that the nation has been under mounting inflationary pressure.

   The pressure, however, might go up further in the second half as the government is poised to raise much-delayed public service fees, including electricity, transportation and others closely related to people's daily life.

   Admitting that it is necessary to raise prices of some public services due to cost increases triggered by high energy prices, the ministry said that it will do its best to keep the hikes to a minimum in order to ease their impact on inflation and the lives of low and mid-income people.

   "We plan to unveil our plans for public service fees in July," Finance Minister Bahk told reporters. "Our main objective is to minimize price hikes and well schedule the price increase timetable in a bid to minimize their impact on inflation and the livelihoods of ordinary people.

   In a related move to stabilize prices, the government will keep working hard to stamp out market monopoly and intensify its crackdown down on price rigging in a bid to encourage price cuts through competition. The ministry added that it will toughen the punishments on anti-competition market practices.

   Job creation is another main focus of policymakers during the second half.

   Though the government predicted somewhat improved labor market situations and revised up its job creation projection for this year, it still remains worried about high unemployment among younger people.

   Tax incentives will be offered to encourage companies to hire people. Support will also be granted for businesses to invest in research and development in areas deemed to induce employment, the ministry said.

   "We will draw up taxation, financial and other measures in a way to induce employment by providing benefits to those companies that hire more workers," Bahk noted.

   Meanwhile, for the longer-term economic growth plans, the government has been pushing to bolster domestic demand -- consumer spending and corporate investment -- in a bid to reduce its reliance on exports for economic growth.

   Heavy dependence on trade for growth leaves South Korea frequently at the mercy of fluctuations in overseas markets, causing economic turbulences here.

   In a bid to boost domestic demand, the ministry said that it will lower entry barriers to professional jobs and keep working to remove regulations that stand in the way for market creation and fair competition.