State spending to top $729 billion by 2030 amid fiscal expansion
Summary
Korea’s annual government spending will top 1 quadrillion won by 2030 under Lee Jae Myung administration fiscal expansion, government figures showed Tuesday. The Ministry of Planning and Budget said spending will rise to 820.9 trillion won next year, 957.4 trillion won in 2029 and 1.005 quadrillion won in 2030. Officials said the plan is backed by strong tax revenue from semiconductor earnings, while the managed fiscal deficit is expected to stay below 3 percent of GDP through 2030.
Key Facts
- National tax revenues are projected to rise 49.8 percent to 584.4 trillion won next year, up 194.2 trillion won from this year.
- Revenues are forecast to grow at an average annual pace of 13.4 percent over five years, reaching 644.8 trillion won by 2030.
- Total national debt is set to cross 1.5 quadrillion won next year and reach 1.734 quadrillion won by 2030.
- The national debt-to-GDP ratio is projected to rise from 48.3 percent to 49 percent over the same period.
- A budget ministry official said the government used conservative estimates based on lower-end historical tax elasticity figures from the past decade to prepare for possible market downturns.
Construction is underway on SK hynix’s semiconductor fab in West Lafayette, Ind., Friday. Yonhap
Korea’s annual government spending will surpass 1 quadrillion won ($729 billion) for the first time by 2030, driven by aggressive fiscal expansion under the Lee Jae Myung administration, government figures showed Tuesday.
According to the 2026-2030 fiscal plan published by the Ministry of Planning and Budget, government expenditure will reach 820.9 trillion won next year before climbing to 957.4 trillion won in 2029 and reaching 1.005 quadrillion won in 2030.
The spending expansion is largely fueled by surging tax revenues, driven by strong corporate earnings in the semiconductor sector.
National tax revenues are projected to jump 49.8 percent to 584.4 trillion won next year, up 194.2 trillion won from this year. Over a five-year period, revenues are forecast to grow at an average annual pace of 13.4 percent, reaching 644.8 trillion won by 2030.
Despite record spending, the government expects to keep its fiscal deficit under control, supported by steady nominal economic growth.
The government projects the managed fiscal deficit to remain below 3 percent of nominal gross domestic product (GDP) throughout Lee’s term; at 0.1 percent next year, 1.5 percent in 2028, 2.5 percent in 2029 and 2.9 percent in 2030.
Total national debt, meanwhile, is set to cross the 1.5 quadrillion won mark next year and expand to 1.734 quadrillion won by 2030. As economic output expands, the national debt-to-GDP ratio is projected to rise only moderately, however, from 48.3 percent to 49 percent over the same period.
Concerns remain that the fiscal trajectory relies heavily on the assumption that nominal GDP will grow by around 3 percent annually after 2028. Any unexpected slowdown in the global semiconductor market could hit corporate tax receipts and widen the fiscal deficit.
In response to such concerns, a budget ministry official said, “The government applied conservative estimates based on lower-end historical tax elasticity figures from the past decade to prepare for potential market downturns.”
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