SEOUL, Dec. 12 (Yonhap) -- South Korea is poised to pay more attention to stability in running its policies next year as the economy is faced with mounting uncertainties from the eurozone fiscal debt problems and concerns over a worldwide recession.
The government will thus seek to boost domestic demand to better cushion its export-oriented economy from outside turmoil, while strengthening the nation's overall economic health for sustainable growth.
On Monday, the finance ministry unveiled its 2012 economy management plan, which includes its broad policy stance, growth outlooks and other projections that affect the nation's economy and the livelihoods of ordinary working-class people.
In particular, the ministry sharply revised down its growth outlook for next year to 3.7 percent from 4.5 percent predicted in September. It also expected the economy to grow 3.8 percent this year.
"In the face of the global fiscal crisis, the global economic growth is expected to slow down, mainly because of the downturn in developed economies," the ministry said.
"The Korean economy is slowing down as the external conditions are becoming unfavorable. Inflation is easing, but upward pressure from the demand side is continuing. The recovery has not been felt enough by the working class and potential risk factors and structure problems remain."
Cloudy global economic situations are expected to take a toll on the nation's exports, a key driving force behind its economic expansion.
The ministry expected that exports will grow 7.4 percent next year, sharply decelerating from this year's projected 19.2 percent expansion.
That will also translate into less investment and employment. The ministry, in particular, forecast that the economy will add 280,000 jobs next year, compared with about 400,000 projected for this year.
The government is most concerned about which direction the eurozone sovereign debt crisis will head and what impact it could have on major economies, including the U.S., as Korea depends heavily on trade for growth.
Against this backdrop, the government appears to be putting more emphasis on stability than growth until the nation tides over the toughening global economic conditions.
"We can say that the government will pursue the so-called 'growth in stability,'" said Choi Sang-mok, the director general of the finance ministry's economic policy bureau.
"Stability should be achieved in such areas as inflation, the livelihoods of ordinary people and also in the overall system," he noted.
To abate the impact of external shocks and stabilize the economy from outside shocks, the government will intensify efforts to boost domestic demand and reduce its dependence on exports for growth.
"The government will make efforts to create a more favorable environment for investment, to boost domestic demand, such as by growing the service sector, and to secure sustainable exports growth," the ministry said.
Still things will hinge mostly on outside factors and all the government measures could prove to be insufficient if external conditions deteriorate further.
"What is most important is how the external environment changes," Choi said. "The government's policies will have some effect, but they are not the key. The key is how fast outside uncertainties will be lifted."
His remarks seem to underline the dilemma currently confronting the government, which might only have a few options to choose from given that its economy will continue to be swayed by global market conditions no matter what measures it takes.
The government instead emphasized that it will have to step up monitoring of global markets and check its macroeconomic soundness in order to minimize outside shocks and guarantee the stability of its own economy.
It will also manage its macroeconomic policy "flexibly" in response to how the economic situations at home and abroad play out, while focusing its efforts on keeping inflation under control. Household debts and capital flows in securities markets will also be under close monitoring for economic stability.
"Contingency plans for each situation will be reviewed through the emergency response system," the ministry said. "Through improving the accuracy of the early warning system and holding regular meetings to check economic situations, the government will intensify its monitoring of macroeconomic soundness."
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