Minister pledges stimulus steps

Strategy and Finance Minister Choi Kyung-hwan speaks during a meeting with heads of research institutes at the Press Center in Seoul, Friday. / Yonhap

By Yoon Ja-young

Strategy and Finance Minister Choi Kyung-hwan says the government will take “sufficient” stimulus steps swiftly to contain the fallout from Middle East Respiratory Syndrome (MERS).

“Domestic consumption and the real estate market have been showing signs of recovery thanks to expansionary macroeconomic policy, the low oil price and low interest rate,” Choi said in a meeting with the heads of economic institutes, Friday.

“However, uncertainties are increasing both externally and internally.”

He said MERS was contracting consumption and the service sector. “We can’t exclude that it will be negatively affecting the economy if it persists,” he said.

The minister said exporters were also having trouble due to the slowdown in China and weakening of the yen and euro.

He said economic policy for the latter half of the year will focus on putting the economy back on the recovery track.

Choi said the government will focus on ending the spread of MERS.

“After examining the current economic situation, the government will prepare measures to bolster the economy, if needed,” he said.

Some economists have been demanding that the government set a supplementary budget to boost the economy, with MERS seriously affecting consumption.

According to the finance ministry, sales at department stores dipped 16.5 percent in the first week of June compared with a year ago. Retail outlets also saw sales decrease 3.4 percent. A survey of restaurants showed that MERS cut average sales by 38.5 percent.

The finance ministry had estimated the economy would grow 3.8 percent this year, but it is expected to lower that forecast. In fact, the Bank of Korea slashed its economic growth rate outlook to 3.1 percent, and some economic think tanks are suggesting it will go below 3 percent.

Choi said the government would also focus on tackling youth unemployment. “The government will make diverse efforts to increase jobs in sectors that youths prefer,” he said.

As the official retirement age is extended to 60 from 58 from next year, businesses are likely to reduce the hiring of rookies. The country’s youth unemployment rate stood at 9.3 percent in May, which is 2.5 times higher than the overall unemployment rate.