Seoul, Jan 3 (IANS) South Korean authorities are mulling ways to cushion the local economy in a bid to alleviate economic woes amid a prolonged political turmoil and ease potential economic strains from the incoming US administration.
South Korea’s Acting President and Minister of Economy and Finance Choi Sang-mok on Friday pledged to make efforts to maintain the country’s export momentum and address uncertainties for local businesses, Yonhap news agency reported.
“The South Korean economy, which has been experiencing a sluggish recovery in domestic consumption, is facing unprecedented uncertainties,” Choi was quoted by Yonhap as saying during a meeting with representatives from business organisations.
“The government plans to devise systematic response strategies to address uncertainties in the trade environment, including the launch of a new US administration,” Choi said, referring to a likelihood of punitive trade policies towards the Asian country by the incoming Trump administration.
Specifically, the acting president pledged to provide state support for research and development projects in key industries such as artificial intelligence and bio-health, and vowed to eliminate unnecessary regulations to foster new growth engines for the economy, Yonhap said in the report.
On the same day, Choi also made a promise to lend “bold and exceptional support” to the country’s small and medium-sized enterprises (SMEs), including greater tax benefits, Xinhua news agency cited a Yonhap report.
The proposed measures included a temporary investment tax credit for SMEs as well as doubling the income tax deduction rate for credit card usage and promoting the use of government-issued gift certificates to stimulate domestic spending, Choi said.
In another effort to prop up the economic prospect, the country’s central bank governor stressed the necessity to flexibly implement its monetary policy in the face of unprecedented political and economic uncertainties, Yonhap said in another report.
Bank of Korea (BOK) Governor Rhee Chang-yong said in a meeting with heads of financial institutions that the central bank will decide the pace of its rate cuts while closely monitoring risks at home and abroad as well as incoming data.
The BOK is under mounting pressure to calibrate its monetary policy in response to potential severe economic repercussions, especially after a record-low local exchange rate against the US dollar, and a deadly airplane crash further dented the already gloomy economic outlook following the political crisis over the botched imposition of emergency martial law and the subsequent impeachment of President Yoon Suk-yeol.
The finance ministry expected the country’s economy to grow 1.8 per cent this year, lower than its earlier projection of 2.2 per cent and slowing from last year’s estimated 2.1 per cent expansion, according to Yonhap.
The ministry said Friday that 26 major public institutions are set to make investments worth 66 trillion won (45 billion US dollars) this year to support the government’s economic stimulus efforts, including moves to inject money to stabilize the housing market by boosting the housing supply and to invest in power transmission projects as part of government-led efforts to enhance the infrastructure for energy, transportation and logistics, Yonhap said.
–IANS
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