Seoul, South Korea plans to implement its economic policy next year to maintain economic recovery momentum and prepare for a post-pandemic era, Yonhap quoted the country’s finance ministry as saying today, on Thursday.
The South Korean economy is expected to grow 3.2 percent next year, following this year’s estimated contraction of 1.1 percent, the first contraction since the 1997-98 Asian financial crisis, according to the Ministry of Economy and Finance.
The ministry’s 2020 and 2021 growth outlooks are lower than its June projection of 0.1 percent growth for this year and 3.6 percent for next year.
Still, its growth estimate for next year is higher than the Bank of Korea’s growth projection of 3 percent and the Organization for Economic Cooperation and Development’s outlook of 2.8 percent.
Asia’s fourth-largest economy is expected to rebound next year on improving exports and domestic demand, according to the ministry. But economic uncertainty also remains high, depending on the development of virus outbreaks and timeline for a vaccine rollout.
Against this backdrop, the Korean government unveiled two-pronged approaches in managing its 2021 economic policy — to support a “fast and strong” economic recovery and to prepare for a smooth transition into a “pacesetting” economy in the post-COVID-19 era.
“The year 2021 will be a crucial time for South Korea as we need to fully overcome the pandemic-caused crisis and ramp up preparations for taking a lead in the post-COVID era,” Vice Finance Minister Kim Yong-beom said at a press briefing Monday.
To reinvigorate recovery momentum, the country plans to keep its expansionary fiscal policy next year and will frontload 63 percent of the nation’s budget spending in the first half of 2021.
This year, South Korea drew up measures of 310 trillion won (US$283 billion) to respond to the pandemic, including four rounds of extra budgets totaling 67 trillion won.
On Dec. 2, the National Assembly passed a record 558 trillion-won national budget for next year that includes nearly 4 trillion won allocated for additional coronavirus relief funds and vaccine purchases.
In an effort to prop up weak domestic demand, the ministry also plans to provide tax incentives, including an additional tax credit for card spending and an extension of a cut in the consumption tax on passenger cars.
The government will also focus on creating jobs and supporting smaller merchants and companies hard hit by the pandemic.
The ministry said the job market is expected to fare better next year, but it plans to continue to support the sectors battered by the COVID-19 outbreak, including the tourism, accommodation and airline segments.
Source: Saudi Press Agency