Finance minister nominee warns of prolonged inflationary pressure

Choo Kyung-ho, nominee for deputy prime minister and minister of economy and finance, speaks during a National Assembly hearing in Yeouido, Seoul, Monday. Joint Press Corps

By Yi Whan-woo

Choo Kyung-ho, the nominee for deputy prime minister and minister of economy and finance, has warned that inflationary pressure may deepen after consumer prices rose 4.1 percent in March, which is the steepest rise in over 10 years.

Speaking at a National Assembly hearing, Monday, Choo said while the soaring inflation is attributed to a spike in global oil prices, an oil tax cut expanded by the outgoing Moon Jae-in administration appears to provide no benefit to the public.

“The upward trend in consumer prices that grew 4.1 percent is likely to intensify for the time being,” Choo said. “In that regard, stabilizing consumer prices should be prioritized in our economic policy and I will closely go over the related issues with experts if given the chance.”

Referring to fuel tax cuts that have expanded to 30 percent from 20 percent during May 1 to July 31, Choo noted the effect “may not be felt” by consumers because the policy was introduced amid surging oil prices.

“If I get the chance, I will thoroughly work with relevant ministries and examine whether the impact of the fuel tax cuts ultimately reaches consumers across distribution channels.”

Choo, who is also a lawmaker for the main opposition People Power Party and an outspoken critic of President Moon Jae-in's economic policies, did not back away when asked about his opposition to Moon's economic slogan of income-led growth.

The slogan was premised on government intervention to increase people's incomes and spur growth, as opposed to President-elect Yoon Suk-yeol's vision of a market-driven economy.

“I am not against the idea of enabling people to receive higher income, but I disagree with many points concerning the way the idea has been carried out,” he said, pointing to the sharp hike in the country's minimum wage as an example.

Yet, Choo said he will not scale down assistance for Moon's ongoing economic policies over political differences.

It has been widely speculated that the incoming administration of Yoon will target Moon's policies and adjust relevant expenditures in order to fund a supplementary budget for pandemic-stricken small business owners.

The possible first target is the Korean New Deal, Moon's signature economic initiative which seeks to invest 220 trillion ($173.7 billion) by 2025 to spur green growth and digital technology on the country's path to economic recovery.

“Adjusting spending on certain policies just because they are initiated by the current government will not be the way I work,” he said. “The relevant decision will be solely made on economic reasons and I will maintain economic projects initiated by the Moon government as long as they have merit.”

In relation to Yoon's promise to ease housing tax burdens, Choo said scrapping the tax for those who own expensive homes is “difficult to be realized right away.”

His comment comes as the presidential transition committee has hinted at stepping back from Yoon's pledge to lift regulations on the ownership of multiple homes, including taxation as a way to curb soaring home prices.