Flickering Signs of Economic Recovery

Minister Yoon calls for cautious monitoring as economic uncertainties still remain at National Assembly Economic Policy Forum

Minister Yoon Jeung-hyun of the Ministry of Strategy and Finance said in his speech at the National Assembly Economic Policy Forum held on Sept. 2 at the National Assembly building in Yeouido, Seoul, that the economy is moving out of its sluggish state, registering 2.3 percent growth in the second quarter, stopping its fall earlier than many other countries. First quarter growth recorded 0.1 percent better than the preceding quarter.
Rep. Chung Hee-soo of the Grand National Party is the chairman of the forum and is a member of the National Assembly Land, Transport and Maritime Affairs Committee.
Minister Yoon, who was invited to the forum to speak, said the employment rate still lagged, despite government stimulus efforts to slow the unemployment rate.
The world economy has been showing signs of recovery lately from the aftermath of the Lehman Brothers’ bankruptcy led by such countries as Germany, France and Japan, along with the United States, said the minister. Both financial and stock markets have been rebounding as well, Yoon said, adding that the stock market index rose 50 percent since March and the foreign exchange rate has been stable at the 1,200 won level versus the U.S. dollar. The current account also has been seeing a surplus continuously since the beginning of the year, with it coming to $26 billion during the first seven months of 2009. The current account is likely to continue to show a surplus during the remainder of the year, the minister predicted.
Minister Yoon said the government will continue to strongly push its corporate restructuring policies to prepare for the post-crisis period, state-owned companies in particular, along with policies to remove various regulations that are in the way of business activities as it has done in the past to safeguard the entrepreneurial morale of the business community.
He said continuous corporate growth and the creation of profits are the starting point for the development of the national economy and the happiness of the people. Profitable businesses create jobs, earn income and make consumption possible, enabling the government to secure funds for its operations.
“In the second half, the government plans to strengthen the base for economic recovery as uncertainties still remain, although the economy has been growing at a rate of 2.6 percent compared to the previous quarter. We are not sure whether the situation will be sustainable for the rest of the year,” Yoon said.
He said the government will be cautious in its implementation of an exit policy as it should be in tune with the economic rebound backed up by solid signs. “When it is carried out too early, it would stifle economic recovery and on the other hand, if it is too late, it could incur a variety of side effects such as inflation, asset bubbles and moral hazards,” the minister said.
The government is ready to take measures against the development of asset bubbles. The prices of apartments in the Gangnam area have been rising with the number of transactions increasing, requiring close monitoring of the situation.
The government intends to make diplomatic efforts to ward off any moves for trade protectionism through the G-20 Conference by leading international cooperation and sparing no efforts to expand Korea’s export market by concluding free trade agreements with key trading countries. The government will maintain stimulus measures until the economic recovery is visible.
The proposed tax reform for 2009 is also meant to back up the economic rebound trends as well as to help the general public and middle class households ease their economic difficulties. At the core of the tax rate change is the effort to raise the transparency of the taxation system by lowering tax rates and yet broaden tax sources to expand tax revenues for healthy government financial resources.
The government is fully aware of the poor state of living standards for the general public due to the lack of jobs and reduced incomes, making household finance difficult. This led the government to increase the welfare budget ratio to 29.2 percent, the highest in history, in an effort to continue to pursue government support for poor households, SMEs and self-employed people. nw

Minister Yoon Jeung-hyun of the Ministry of Strategy and Finance, delivers a speech at the National Assembly Economic Policy Forum on Sept. 2 invited to speak by Rep. Chung Hee-soo, chairman of the forum and a member of the National Assembly Land, Transport and Maritime Affairs Committee.