Talks with Think Tanks and IBs
DPM Hong Holds Expert Talks to Check 2nd Half Policies
Deputy Prime Minister Hong Nam-ki called a meeting of economists to look into the country’s 2nd half economic policies scheduled to be released late this month, where analysts from think tanks and investment banks (IBs) participated.
The following is a summary of Deputy Prime Minister Hong’s keynote address.
Background to the 2nd half policies
Spread of the virus and vaccine rollouts will be the two critical variables on the way to the Korean, as well as global, economic recovery. However, the V-shaped global recovery prospected by many international financial institutions, IBs and think tanks is quite encouraging as we also expect the Korean economy rebound in a similar pattern. To help the economy get on this fresh momentum and at the same time make the recovery more inclusive are the focuses with which the government is working on the 2nd half policies. We have four tasks to get on with.
1) We have to have an objective analysis of the 2nd half economy, such as how fast the recovery will be globally and locally
2) We have to draw up measures specific to each problem, for example, measures to boost exports and investment, and others to address future challenges, such as future growth engine development, net-zero economy and demographic changes
3) We have to avoid a K-shaped recovery and help achieve an inclusive recovery through employment measures and strengthened social safety nets
4) We have to be prepared for the risks, such as rising inflation and household debt, booming asset markets and potential external volatility
Mull over 2nd supplementary budget
The government will consider the 2nd supplementary budget of this year to accelerate vaccination, promote consumption and job creation, as well as finance COVID-19 reliefs for pandemic-hit businesses. The supplementary budget will be funded with extra tax revenues amid economic recovery and soaring asset prices without issuing extra Treasury bonds.
We will see an important transition over the period of the 2nd half of 2021 to early 2022, during which we will go back to the normal life, a post-pandemic economy will begin and new initiatives, such as the Korean New Deal and Net-Zero 2050, will start being undertaken. The 2nd half economic policies are important, in that it will be the first step toward this future.
Please refer to the attached pdf