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(Yonhap Interview) Finance minister vows to attain 3 pct growth

2017/09/03 15:22

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SEOUL, Sept. 3 (Yonhap) -- South Korea's finance minister said Sunday that the government will consider additional stimulus measures if necessary to achieve its goal of 3 percent growth this year amid concerns about multiple risks, including North Korea, trade protectionism and a possible construction slowdown.

In an interview with Yonhap News Agency, Finance Minister Kim Dong-yeon also said the government will push for a balanced two-track sustainable growth policy anchored on industrial innovation and broad-based income distribution.

South Korea raised its forecast of this year's growth from 2.6 percent to 3 percent in late July based on a recovery in exports and investment.

Kim expressed confidence in the goal and the government's resolve to put South Korea's growth back in the 3 percent range in the longer term.

"The government's economic forecast includes its will to reach the target as well," he said.

"Macroeconomic indices are not bad and showing signs of improvement. A firm growth trend is not seen yet, and there are risk factors like North Korea, trade protectionism and construction investment problems stemming from the real estate measure. The government is managing these," he said.

According to central bank data, Asia's fourth-largest economy grew 1.1 percent in the first quarter and then 0.6 percent in the second quarter, while its exports remain in positive terrain for 10 months in a row.

The National Assembly approved a 11 trillion-won (US$9.9 billion) extra budget in July to increase jobs and boost the economy.

"The government will look into the effect of the extra budget and other situations and, if necessary, will consider additional measures to prop up the economy," the minister said. "At this moment, I will do my best to reach the 3 percent growth goal."


The top financial policymaker said the government will put more emphasis on fiscal expansion in line with President Moon Jae-in's "income-led growth" pledge through boosting the welfare and job creation sectors.

The government's 2018 budget plan called for 429 trillion won (US$382.6 billion) in spending for 2018, up 7.1 percent from this year's 400.5 trillion won, the fastest on-year increase in nine years.

It said the increased outlay is aimed at bolstering household income, with policymakers saying it can increase consumption with the help of various policy tools.

It will take a long time and cost a lot to change the entire frame of our economy and society to tackle the low growth and deepening polarization, said the finance minister.

The minister said the government will also give weight to supply-side measures to boost industrial competitiveness and corporate innovation.

Aside from income-led growth, the government will push for innovation-led growth, which is "enhancing the overall competitiveness of the economy and creating new businesses by connecting humans, space and capital based on openness and sharing," he said.

Kim stressed that there will be no further tax hikes without public consensus.

The government has recently unveiled a tax revision plan that would impose a corporate tax of 25 percent on businesses with taxable income of 200 billion won or more. Companies with income in the 20 to 200 billion-won range will be subject to the current rate of 22 percent.

The proposed tax revision -- which is subject to parliamentary approval -- is aimed at carrying out President Moon's key agenda estimated to cost 178 trillion won.

"It is necessary to earn people's agreement to change a tax policy," said the minister. "First, we explain what we are going to do. Then, we have to talk about how we rake in the money, through raising taxes, reducing spending or issuing state bonds. We have to go through all these steps and ask for people's consent."