SEJONG, Jan. 14 (Korea Bizwire) – The government said Thursday that it will put its top economic policy priority on jump-starting the country’s economy by focusing fiscal spending on a faster recovery of domestic demand and revitalizing sagging exports.
In a joint report to President Park Geun-hye on the government’s economic policy goals for this year, seven economy-related ministries led by the Ministry of Strategy and Finance emphasized a “balanced” recovery both in domestic demand and exports.
“We will put priority on expansionary fiscal policy this year to boost domestic demand as a whole, supplementing weak private consumption,” Deputy Finance Minister Jeong Eun-bo said in a pre-briefing on Wednesday.
The report was joined by the Ministry of Trade, Industry and Energy; the Ministry of Land, Infrastructure and Transport; the Ministry of Agriculture, Food and Rural Affairs; the Ministry of Oceans and Fisheries; the Fair Trade Commission; and the Financial Services Commission.
The 2016 policy is aimed at keeping alive the pace of recovery that started in the third quarter when the country grew to a five-year high of 1.3 percent on-quarter, while the country posted an on-year drop in exports every single month last year.
The government will frontload its scheduled 2016 spending in the first quarter of this year to fuel the flagging economy, with additional investments by public agencies and pension funds.
The finance ministry earlier said that it will spend 30 percent of its 330.6 trillion-won (US$274.1 billion) budget in the first three months of the new year to prevent a possible drop in consumption as the temporary excise tax exemption program for cars and large consumer appliances terminated at the end of last year.
On the back of the tax cuts and other government-led consumption boosting policies, indicators show that domestic consumption has been improving, with retail sales growing 5.5 percent on-year in November.
At the same time, the government will host nationwide discount events, including the Korea Grand Sale, to maintain the upbeat trend in consumption.
The massive sales promotions were successful in escaping the sluggish mode stemming from the Middle East Respiratory Syndrome outbreak, the ministry added.’
The government will also map out new plans to expand visa waiver programs and improve duty-free shop license rules in a bid to attract more foreign tourists.
Plans to revise income tax codes and reduce housing expenses will also be on the front burner to give people much room for additional consumption, the government said.
To spur local spending and promote investment at the same time, the government will energize its deregulation drive and funnel 5 trillion won into new technology industries.
The new debt-screening guidelines will be implemented this year to tackle the mounting household debt that has been widely regarded as the biggest threat to Asia’s fourth-largest economy in the face of a U.S. rate hike and a slowdown in China.
The government said the new scheme is designed to stiffen the loan screening process by money lenders and encourage fixed-rate loan programs.
The total amount reached a record 1,160 trillion won in the third quarter of last year, with its growth pace gaining speed amid low borrowing costs and the government’s push to revive the local property market.
Revitalizing exports will be another key pillar of the government’s economy boosting plan.
It will use the free trade pact with China to help local companies make greater headway into the vast market. It will run a 4 trillion-won program to support exporters in building sales distribution networks in China and seek mergers and acquisitions to enter the market.
The government will also offer 4.8 trillion won in trade-related financing in 2016 and lower export insurance premiums to bolster consumer goods exports.
It pledged to provide 87.7 billion won in research and development support to the private sector, as well as play an assisting role in overseas marketing.