Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
President vows to focus on overcoming economic inequality
President Moon Jae-in delivers a speech at Cheong Wa Dae in Seoul, Monday. Yonhap
By Lee Min-hyung
Experts advise gov't to drop 'blind optimism'
By Lee Min-hyung
President Moon Jae-in vowed Monday that he will try his best to alleviate virus-induced economic inequality during his remaining year in office.
“We will do everything possible to recover jobs and narrow the gap and inequalities caused by COVID-19,” he said in a nationally televised press conference. “We will ensure that rapid economic recovery will lead to the restoration of livelihoods.”
President Moon also said the economy is on a solid track towards recovery and pledged to achieve a stronger post-coronavirus rebound. The South Korean leader targeted 4 percent economic growth this year.
“I will mobilize all government capabilities to boost the vitality of the local private sector as well as achieve a growth rate of over 4 percent for the first time in 11 years,” Moon said. The President added that his economic team is set to lead the economic recovery through “active” and “expansionary fiscal policies.”
The domestic economy saw a 1 percent contraction in 2020 due to the coronavirus pandemic. But starting this year, the economy is showing signs of bouncing back thanks to growing exports in semiconductors and other components, in which the country excels. First-quarter GDP growth reached 1.6 percent from a quarter earlier, according to the Bank of Korea.
Regarding South Korea's role in the semiconductor industry, Moon also stressed that he will strengthen Korea's leadership in the chip industry, as the continued global shortage of chips sees a realignment of the global supply chain. South Korea is home to the world's two largest memory chip manufacturers, Samsung and SK. Chips are rising as “strategic items” due to the shortage. Moon is set to discuss issues related to the global semiconductor shortage during his scheduled summit with U.S. President Joe Biden later this month in Washington.
Moon also stated that the government will continue to support companies' investment growth proactively.
“We will ensure that aggressive expansionary fiscal spending spearheads the economic recovery. We will prepare bold measures to boost consumption and domestic demand in step with how our epidemic prevention and control situation stabilizes,” he said. “We will actively support preemptive corporate investments and, in particular, will do everything possible to obtain the best export figures ever.”
The International Monetary Fund (IMF) and the OECD raised their 2021 GDP growth forecasts for the nation to 3.6 percent and 3.3 percent, respectively, reflecting signs of a recovery in exports and diminishing virus-related anxieties due to the increased supply of vaccines.
Moon also promised to work on improving worsening employment figures until his term ends next year.
“The top priority will be placed on job creation until the end of my term, and we will do all we can to create even one more additional job,” he said.
The annual employment rate came in at 60.6 percent back in 2016, a year before the Moon administration took power. However, the figure declined to 60.1 percent in 2020. The unemployment rate also reached 3.7 percent during 2016, but worsened to 4 percent last year.
Regarding the situation about the nationwide real estate “bubble,” he stressed his unwavering determination to root out speculation.
“We will thoroughly block real estate speculation in order to address ever-widening wealth inequality,” he said. “We will do our best to stabilize the real estate market while protecting without fail genuine future homeowners.”
He also hinted at the possibility of deregulating real estate policies for younger age groups, newlyweds and non-home owners.
The President also pledged a zero-tolerance policy for real estate corruption, reaffirming his determination to complete fundamental reforms in policies to stop any illegal speculation, particularly among government officials and those in the public sector.
Experts, however, advised the government to drop the blind optimism, due to the slow pace of vaccinations here.
“Even if some global institutions voice an optimistic outlook over Korea's GDP growth this year, the level is far short of that of most other developed countries,” Korea University economist Kang Sung-jin said. “We still have much more room for additional growth. Such an overly optimistic attitude does no good at this moment.”
“People from countries with high vaccination rates are engaging in so-called revenge spending, and this spending is helping to boost their domestic consumption, but this situation is not the case in Korea for now,” he said.
Sejong University economist Kim Dae-jong also said that the slow pace of vaccinations here would keep dragging down the nation's economic growth.
“The government shared its plan to vaccinate more than 70 percent of the population by the end of 2021, but carrying out this plan appears to be unrealistic,” he said. A stable economic recovery will be made possible only after the vaccine-related concerns are cleared up, reiterated the expert.