Gov't to focus on revitalizing economy in 2nd half

President Yoon Suk Yeol delivers a speech before receiving a joint government briefing on economic policy objectives for the second half of the year at the guest house of Cheong Wa Dae, the former presidential office compound, in Seoul, Tuesday. Yonhap

GDP growth outlook lowered to 1.4%

By Yi Whan-woo

The government will place top priority on reinvigorating the economy in the second half of this year by expanding financial support for exporters and bolstering domestic demand through more incentives for local travel, the finance ministry said Tuesday.

Reflecting sluggish exports, the ministry lowered its 2023 economic growth outlook from 1.6 percent to 1.4 percent, which is on a par with the BOK's forecast, but below 1.5 percent projected by the International Monetary Fund (IMF).

This is the gist of the economic policy objectives for the second half unveiled by the Ministry of Economy and Finance Tuesday.

In a press briefing, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho said the economic policy objectives for the second half center on four main goals of revitalizing growth momentum, stabilizing people's livelihoods, improving economic fundamentals and laying the groundwork for future infrastructure.

Among the measures to boost exports included a record 184 trillion won ($141 billion) in loans for exporters to facilitate their access to raw materials to manufacture products. Another 26 trillion will be spent to support facilities investments.

The government will also step up high-level diplomacy aimed at helping businesses win $35 billion worth of overseas projects this year.

“The government must prioritize exports in its economic policy and should make corresponding efforts to expand exports,” President Yoon Suk Yeol said while receiving a joint government briefing on the economic policy objectives early Tuesday.

He said exports are “a cornerstone of the Korean economy which has a great external dependence and are also at the core of national job growth,” adding, “The relevant ministries should take measures to bolster sales, projects and investments overseas.”

He also asked the ministries to work on stabilizing people's livelihoods on the country's path to improve economic fundamentals.

To encourage the reshoring of Korean businesses in cutting-edge technology, the government said it will make them eligible for incentives only offered to foreign firms and support up to 50 percent of the investments they need.

To attract more skilled laborers from overseas, the government will continue to offer a 19 percent flat income tax rate for foreign laborers. It initially planned to limit such incentives for foreign workers entering here by the end of 2023.

To spur domestic spending, the government plans to launch a massive sales discount campaign in cooperation with discount store chains and department stores this autumn.

A tourism package offering accommodations and express train tickets at lower prices will be introduced to stimulate demand for domestic travel.

To attract foreign tourists, the government plans to ease entry rules and enhance other relevant policies. The latest benefits will include an overhaul of a payment system to make reservations easier for foreign tourists who want to use trains, express bus and other transportation when they arrive here and want to book rooms in advance.

To improve economic fundamentals, state-run R&D spending will accelerate for aerospace technology, biotechnology, artificial intelligence (AI), robots and other future-oriented sectors.

A global industrial cluster is also being planned to nurture cutting-edge technologies.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho speaks during a joint government briefing on economic policy objectives for the second half of the year at Government Complex Seoul, Tuesday. Yonhap

The ministry said the overall 2023 economic growth rate will remain at 1.4 percent, but the pace of growth will double in the second half compared to the previous six months.

Choo noted that inflation slowed to a 21-month low of 2.7 percent in June, while the number of new jobs for the whole of 2023 is expected at 320,000, which is three times larger than previously forecast. The government forecasts inflation to stand at 3.3 percent this year.