Moon set to push for post-virus economic rebound
Lee Nak-yon, center bottom, a former prime minister and a candidate of the ruling Democratic Party, watches TVs broadcasting results of exit polls for the parliamentary election at the National Assembly in Seoul, Wednesday. AP-Yonhap
By Kim Yoo-chul
By Kim Yoo-chul
President Moon Jae-in, the ruling Democratic Party of Korea (DPK) and the Cheong Wa Dae economic team are expected to talk up the prospects of a rapid economic rebound from the COVID-19 pandemic as the results of the general election are expected to bolster his position, presidential aides and political analysts said Wednesday.
As the Korean president serves a single five-year term with no possibility of re-election, the results were “considered” crucial for Moon and the ruling DPK. Accordingly Moon doesn't appear to need to worry about entering “lame-duck” status for now as they will clearly give him a fresh impetus in pushing forward his economic agenda which had been stalled by the pandemic.
With the DPK retaining control of the National Assembly, Moon is expected to continue to try and narrow the widening gap between the haves and have-nots by prioritizing incomes and tightening rules on affluent housing development after the worst of the coronavirus outbreak is over.
“Wednesday's general election was regarded as a referendum on the President's core economic policies, and what the government and the ruling party have achieved so far. But more importantly, Moon is set to use all available cards to prevent the country's growth from suffering the potential risks of economic and financial instability,” a presidential aide said.
On Tuesday, the President said the government planned to submit another supplementary budget to the Assembly, “soon,” and stressed the administration needed to deal with the worsening job market through more relevant measures. He added that his government will need to provide more assistance programs to companies hit hard by the pandemic, according to Cheong Wa Dae press pool reports.
Specifically, Moon said the extra budget proposal will be submitted to the Assembly immediately after the election. This was because the country faces the huge risk of further job losses in aviation, leisure-related, automotive and technology industries ― the backbone of the economy ― that are reeling from the aftereffects of COVID-19.
“Moon will move forward with his pro-labor, big government and reduction of social inequality policies while applying measures to save small and medium companies that are the backbone of employment. Cheong Wa Dae is set to quickly shift toward an economic agenda,” a high-ranking government official said. He added that the administration will explore the best was to reduce the impact from increases in the minimum wage on large businesses.
Amid worsening economic indicators on multiple fronts, Moon and his economic team will continue their current “moderate” stimulus policies, said Ha Joon-kyung, an economics professor at Hanyang University in Seoul. “The financial authorities and the Bank of Korea will do more in the form of tax cuts, cheaper loans and extra liquidity,” he added.
According to Moody's Investor Services, rising household debt is cited as one of the country's biggest credit challenges despite its very strong fundamentals that can limit exposure to risk. “Although COVID-19 has challenged South Korea's economy, its diversification and high level of competitiveness impart some medium-term resilience to its growth dynamics as compared to peers,” it said.
The government has increased spending to strengthen “social buffers” as Korea is seeing rapid population ageing that could pose a threat in terms of the national debt. The government plans to spend up to 600 trillion won on social safety net programs this year, up from 523 trillion won last year, if the DPK fulfills its election campaign promises.