Boosting GDP to Target Level

MOFE projects per capita income to reach $20,000 in 2008 and $50,000 in 2020

The Ministry of Finance and Economy projects that per capita income would reach $20,000 in 2008 when the term of the Participatory Government of President Roh Moo-hyun is over and the economic growth would be able to sustain a 4 percent annual growth rate until 2010.
Presuming that the economy would continue to sustain its potential growth rate, gross domestic product (GDP) would amount to $1 trillion in 2008 and would hit the level of $2 trillion in 2016 with per capita income reaching $50,000 in 2020.
If the projection holds true, Korea would rank the 9th in the world in terms of the economic scale in 2020, the ministry projected on February 23 in its report summarizing the economic achievements in the first three years of the participatory government.
When the participatory government took over in 2003, the economic conditions were mired in all sorts of difficulties with uncertainties at home and abroad rising. Externally, North Korean nuclear programs and the U.S. invasion of Iraq developed, while at home, domestic economy was running sluggish due to a heavy household debts and financial problems arising from increasing number of credit defaulters and credit card debts.
Even after the new government took over, the rise in the number of credit defaulters continued and the need for restructuring of SMEs and small business operators continued to rise.
Deputy Prime Minister Han Duck-soo, who also is the finance and economy minister, said the participatory government has never resorted to policies to perk up the economy, which might be hurtful to the economy and focused on resolving restructuring problems at their roots in terms of mid-to-long term perspectives. The government also has tried to make the economic structure strong during the economic recess. As a result, the economy has been showing signs of recovery and getting back on track; private spending and domestic economy have recovered to the extend that the economic growth rate during the last quarter of 2005 amounted to 5.2 percent, helped by steady growth in exports. The number of credit defaulters, which had been undermining the economic growth when the new government came in, has improved from April, 2004, along with the return of normalcy in household debt.
The foreign exchange reserves totaled $216.3 billion as of the end of January, the fourth largest after Japan, China and Taiwan.
Following the improvement in the economy, Korea's has been getting higher credit ratings from leading credit ratings firms in the world including Standard and Poor's, which raised the rating from A- to A+ in July, last year. Fitch raised its credit ratings on Korea to A+ from A in October.
The real estate market has found stability after the August 31 measure was enforced to cool down the market, although there were spots where land prices kept rising even after the measure was put into effect. The market has become more transparent, and disciplined following the enforcement of the measure.
In the financial sector, corporations and financial organizations saw their profit and financial structure improve. The stock market index jumped to 1,300 points from 592 points when the government took over in 2003.
The level and the number of receivers of government support in living expenses expanded with the expansion of social safety net and the facilities for the disabled. Following the recovery of domestic economy, income gap has been showing signs of improvement.
Despite these policy results, indications are that some tasks for solutions still remain. Physical symptoms for economic recovery have yet to be felt by SMEs, and people in general due to sluggish domestic economy and the widened gap between the rich and poor. The income distribution has been improving, but still they remain far apart, requiring more positive effort. Trade terms have worsened falling short of improving GNI.
In particular, with the social safety net still in its beginning stage, there still are areas where the welfare programs have yet to reach.
The ministry has made clear its policies to keep the economy on the improvement track in the remaining two years of the current administration, focusing on policies that have successful results. nw

'Presuming that the economy would continue to sustain its potential growth rate, gross domestic product (GDP) would amount to $1 trillion in 2008 and would hit the level of $2 trillion in 2016 with per capita income reaching $50,000 in 2020.'

Deputy Prime Minister and Finance-Economy Minister Han Duck-soo.