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.
Gov't budget may rise sharply next year
Rep. Lee Hae-chan, left, chairman of the ruling Democratic Party of Korea, has a talk with Rep. Cho Jeong-sik, the party's chief policymaker, during a party meeting at the National Assembly, Wednesday. Yonhap
By Lee Min-hyung
By Lee Min-hyung
The ruling Democratic Party of Korea (DPK) has called for an expansionary fiscal policy for next year by securing over 500 trillion won ($429.7 billion) in the state budget in light of stagnant economic growth and pervasive uncertainty in global trade.
The voice comes amid growing economic uncertainty in Korea. The growth rate was minus 0.3 percent in the first quarter, the lowest in 10 years since the local economy was hit hard by the global financial crisis in 2008.
With the external trade and economic outlook remaining murky, the party is underlining the need to brace for the uncertainty by raising the budget next year.
“The government is advised to implement the expansionary budget for next year on a level at least above an increase of this year’s 9.5 percent,” Rep. Cho Jeong-sik, chief policymaker of the party, said last week during a party meeting.
For this year, the government mapped out a “super budget” of 470 trillion won, up 9.5 percent from the previous year. If the suggested 9.5 percent increase in the annual budget is implemented next year, the 2020 figure comes in at 514 trillion won.
The nation’s export-driven economy is not likely to post a positive growth in the near future amid continuing trade uncertainty.
In particular, fragile overseas sales of semiconductors manufactured by major Korean chip giants, such as Samsung Electronics and SK hynix, are unlikely to recover in the latter half of the year. The overseas chip sales account for more than one-fifth of the nation’s exports.
On top of that, Korea is falling victim to a year-long trade conflict between the United States and China. With the trade war showing no immediate signs of ending, the world’s two economic powerhouses are intensifying political pressures on Korea. For instance, Chinese authorities are pressing some Korean companies not to join the Washington-led anti-Huawei campaign.
The U.S., for its part, is also stepping up pressure on Korea, urging it to stop transactions with the Chinese network equipment maker, citing security concerns.
The ruling party also cited recent data showing a decrease in the government debt as another reason to support the demand.
In a meeting with Finance Minister Hong Nam-ki, DPK Chairman Rep. Lee Hae-chan demanded the government take into consideration the enhanced financial soundness when setting up next year’s budget.
Lee said the data indicated the government made more room for expanding the government budget.