By Lee Hyo-sik
Staff Reporter
Strategy and Finance Minister-designate Yoon Jeung-hyun said Thursday that he will support easing of real estate market regulations, pushed by the government and the governing Grand National Party (GNP).
Prior to a parliamentary hearing on his nomination as the nation's next top economic policymaker, Yoon told lawmakers that he agrees in principle to the envisioned three deregulation measures ― the removal of affluent southern Seoul areas from property speculation zones, the exemption of capital gains taxes on unsold apartments in provincial areas and the lifting of price caps on privately-built apartments.
He also warned that the Korean economy may shrink this year unless economic conditions improve significantly in the coming months, indicating the government will soon revise down its 3 percent growth target. Yoon said the export-dependent economy will be more affected by the deepening global economic downturn, adding businesses and households will suffer to a greater extent, compared to their counterparts in other countries.
``With unfavorable economic conditions at home and abroad, the government will revise down its official growth projection for 2009 in the near future by taking future economic trends and outlooks by major economic research institutes here and overseas into consideration,'' he said.
Yoon then said the world's 13th largest economy will continue to face difficulties for the time being, after posting a sharp drop in gross domestic product (GDP) growth in the fourth quarter of 2008, projecting conditions will improve somewhat from the second quarter.
According to the Bank of Korea (BOK), the GDP shrank 5.6 percent in the fourth quarter from a quarter earlier, the biggest drop since the first quarter of 1998, when the economy tumbled 7.8 percent amid the Asian financial crisis.
Yoon's pessimistic outlook came a week after BOK Governor Lee Seong-tae hinted at the possibility of negative growth this year. Since then, the central bank has been moving to cut the 2009 economic projection of 2 percent it made in December to below 1 percent, reflecting rapidly falling exports and continued sluggish domestic consumption.
The ministry has also hinted at slashing its growth outlook from 3 percent to around 1 percent after a series of minus growth projections by foreign investment banks and international organizations in recent weeks. On Tuesday, the International Monetary Fund predicted the local economy will contract by 4 percent this year from 2008.
The finance minister designate then said 100,000 new jobs this year are unlikely, saying that the government will also lower its job growth target.
``Sluggish industrial activities and corporate restructuring will further tighten the already stagnant job market. Considering these and other factors, the government will revise down the number of new job offerings this year,'' Yoon said.
In December, the nation lost 12,000 jobs, compared to the same month in 2007. The Korea Economic Research Institute predicted the nation would lose about 100,000 jobs this year, the first time since 2003, when 30,000 jobs disappeared following the bursting of the credit card bubble.
Samsung Economic Research Institute also expected the number of new job offerings this year to decline by 30,000, while the LG Economic Research Institute said the economy will lose about 40,000 jobs.
On the same day, the state-run Korea Development Institute (KDI) said the economy has entered a full-fledged recession on plunging sales at home and abroad, with corporate investment and employment conditions turning from bad to worse.
According to the National Statistical Office (Office), the nation's industrial production plunged 18.6 percent in December from a year ago, the third consecutive month of decline since October and the worst in 40 years since the NSO began tracking such records in January 1970. Retail sales dropped 7 percent, the largest decrease in 10 years, with corporate investment falling 24.1 percent.