Value context and insight. lkm@koreatimes.co.kr
Korea to launch climate fund, tackle population crisis
President Moon Jae-in is accompanied by Hong Nam-ki, left, deputy prime minister and minister of economy and finance, before presiding over an expanded meeting of economy-related ministers at Cheong Wa Dae, Monday. Korea Times photo by Wang Tae-seok
By Lee Kyung-min
Government to push for structural economic reform in 2nd half
By Lee Kyung-min
The government said Monday that it will beef up efforts to accelerate structural reform in the second half of the year to achieve a solid economic recovery, better prepare for a post-pandemic world and ensure the country's transformation into an advanced economy.
The administration plans to set up the necessary infrastructure and incentive systems to foster a private sector-led ecosystem that promotes environmental, social and corporate governance (ESG) values.
It also plans to launch a climate fund next year to help the country meet its goal of net-zero carbon emissions by 2050 and become a low-carbon economy.
Infrastructure will be set up to reduce the nation's dependence on coal-fired energy production, and financial support will be offered for firms and human resources that can contribute to increasing the commercial viability of low-carbon business models.
These are key elements of the administration's policy directives for the latter half of the year, announced by the Ministry of Economy and Finance, Monday.
In a desperate bid to tackle the so-called “age-quake,” the government also plans to unveil countermeasures to the country's population decline and aging in the coming months. An age-quake, a term coined by British Scholar Paul Willis, refers to an earthquake-like phenomenon caused by a sudden decline in population.
Drastic revisions will be made to state-run projects to remove redundancies and best allocate state resources, as part of a long-term objective of maintaining fiscal soundness; while tightened macro-prudential measures will be adopted to curb snowballing household debt.
The government will ease regulations to help the country's exports exceed $600 billion (678 trillion won) this year, backed by a variety of financial assistance from state lenders.
Expansionary fiscal policy stance will be maintained to bolster the Korean New Deal Initiative and increase efforts to reduce pandemic-induced inequality.
During a meeting at Cheong Wa Dae attended by economy-related ministers, President Moon Jae-in said the pace of recovery of the economy was much faster than previous projections, as evidenced by the country becoming the first to see its GDP recovering to pre-pandemic levels in the first three months of the year.
“Exports hit an all-time high and investment increased sharply in the second quarter, continuing the rapid rebound of the economy,” Moon said.
“The economy will expand faster than the annual growth of 4 percent this year, far greater than the previous target of 3.2 percent. This is a result of containment efforts led by the public and an indication of the country's strength fostered by firms and workers. We need to take this rare opportunity to leap forward toward an advanced economy,” he added.
The finance ministry forecast that Korea will grow 4.2 percent this year, an upward revision from its previous estimate of 3.2 percent, and 3 percent in 2022.
The government also plans to introduce Korean-style ESG guidelines by the end of the year to allow local firms to prepare for the global trend. An ESG platform will be set up where information on the green initiative will be available for Korean businesses and overseas investors.
The administration will come up with measures to boost the labor participation of women, a considerable number of whom are unable to return to work after childbirth and childrearing.
Also among key objectives will be the better integration of foreign workers into the labor market, as well as government-organized lifetime training opportunities to help increase the productivity of individuals.
Population policies will be updated to better reflect the steady increase of single-households, and partnerships that are not recognized under the current legal system.
The government will give vouchers of 1 million won for medical services concerning childbirth, and will seek to have state-run daycare coverage for half of families nationwide by 2025.
Seoul National University economist Kim So-young said the specifics of the plan were repetitive. “Most of the policies are not new, are far from bolstering long-term growth, and lack deregulation to revitalize private-led expansion,” he said.