South Korea's economy is expected to shrink 2 percent this year, the nation's new finance minister forecast Tuesday, downgrading the government's earlier 3 percent growth target, citing deepening global recession woes.
The figure represents a major downturn compared with the government's earlier projection of 3 percent growth.
Yoon Jeung-hyun, the new strategy and finance minister, made the remarks during his first press conference held at the government complex in Gwacheon, south of Seoul.
In his written inauguration speech, Yoon pledged to create more jobs and seek an extra budget aimed at stemming the economy from falling deeper into recession.
"Jitters in the world financial sector linger and it is likely that the global economy might face recession for a considerable period of time. It will be tough for our export-driven economy to attain positive growth economically and in terms of job creation this year," Yoon was quoted as saying by Yonhap News.
"Against this backdrop, what we have to do is to maintain expansionary macroeconomic polices. Our top priority will be to create jobs through demand-boosting measures and to that end, we will continue to inject liquidity into the market and push for a supplementary budget as soon as possible."
Yoon, a former head of the Financial Supervisory Commission, was nominated by President Lee Myung-bak in late January to replace Kang Man-soo who had been under pressure to resign for losing market trust following what critics called his "misguided" economic and financial measures. The replacement comes less than a year after Kang's inauguration.
During his confirmation hearing Friday, he "agreed" on the need for an extra budget, calling for bipartisan support from lawmakers for the expanded spending plan. He didn't elaborate on details including its scale and time frame but some observes expect the nation to push for a 10-trillion won additional budget.
In December, the National Assembly passed a 284.5 trillion won budget for this year, an increase of over 10 percent from the previous year. Demand has been growing for an extra budget aimed at kick-starting the slumping economy.
According to the central Bank of Korea, the economy shrank 5.6 percent in the final quarter of last year from three months earlier, the sharpest contraction in more than a decade. In December, the economy shed jobs for the first time in more than five years.
"We need to regain market trust with our polices as quickly as possible. I will work hard to estimate the current economic conditions objectively and ensure enough communication and consensus-building efforts in the overall policy-making process," Yoon said.