By Lee Hyo-sik
Staff Reporter
The government and the ruling Grand National Party (GNP) have agreed to continue an expansionary fiscal policy stance until there is a genuine recovery, stressing the year 2010 will be a turning point for the nation in its efforts to enter the league of advanced economies.
In a policy consultation meeting with senior GNP lawmakers at the National Assembly, Monday, Strategy and Finance Minister Yoon Jeung-hyun said there were still a number of downside risks at home and abroad and that it was necessary to sustain the fiscal stimulus and other expansionary steps to facilitate the ongoing rebound in the aftermath of the global financial market meltdown.
"Our principle is not to renew temporary measures introduced to overcome the crisis when they come to an end. But we will instead come up with other appropriate policies to prevent the negative impact of the withdrawal of emergency steps on the economy and keep up the current growth momentum," Yoon said.
In response, GNP chief policymaker Kim Seong-jo said that Korea should focus on maintaining the expansionary policy mode for the time being. "At the same time, we should push for rigorous restructuring across all sectors and invest more to nurture new growth engines. The nation needs to make more efforts to improve the livelihood of the low-income bracket and help generate new jobs."
Yoon said given industrial production and other macroeconomic variables in recent months, the economy is sustaining an upward momentum, adding if the current trend continues, it will expand at its growth potential next year.
"But the United States, Europe and other advanced economies continue to suffer high unemployment rates and there are still many other downside risks across the globe, including Dubai's recent debt problem. We should remain vigilant against potential international financial market jitters and be ready to mobilize all possible policy measures to cushion the nation from negative outside shocks," he said.
Yoon said 2010 will be a turning point for the global economy to recover from the unprecedented worldwide downturn, stressing the importance of stabilizing living conditions for low income earners and creating jobs here. "We will upgrade our image abroad through the hosting of the G-20 summit, promote "green" growth and foster it as a new engine of growth. The government will also make an effort to improve fiscal soundness to better cope with the rapidly aging population, low birthrates and climate change."
The ministry plans to unveil a detailed 2010 economic management plan Thursday. It has said the Korean economy will expand by around 5 percent in 2010 from a year earlier and generate 200,000 new jobs.