The Ministry of Economy and Finance (MOEF) held an Expanded Macroeconomic Policy Coordination Meeting at the Bank of Korea (BOK) under the theme of policy directions for addressing structural issues in the Korean economy and achieving a dynamic economy. The meeting, which was attended by Deputy Prime Minister Choi Sang-mok and Bank of Korea Governor Lee Chang-yong, aimed to share policy know-how with the Bank of Korea that has accumulated research experiences on various structural issues in the Korean economy.
During the meeting, DPM Choi, Governor Lee and relevant officials from MOEF and the BOK engaged in in-depth discussions for nearly two hours on the meeting agenda.
DPM Choi noted that excessive regulations and the weakening of the corporate growth ladder have significantly hampered the vitality across industries and businesses and that the demographic crisis is becoming a reality with the reducing working-age population, resulting in a continuous decline in the potential growth rate.
Under these circumstances, DPM Choi stressed the urgency of exploring policy tasks to restore the dynamism of the Korean economy, including strengthening the innovation ecosystem, ensuring fair opportunities, enhancing social mobility, overcoming the demographic crisis such as low birth rates, to ultimately set up economic and social systems that will achieve growth, distribution, and the sustainability of the economy.
Governor Lee pointed out major structural issues; declining labor supply due to low birth rates and aging population, shortage of leading global companies creating high value-added products, trade environment changes including protectionist policies, diminishing benefits gained from the Chinese market, capital population concentration, and outflow of population from local areas.
In order to enhance potential growth rate, he emphasized the need for increasing the utilization of idle labor, maintaining competitiveness of the information and communication technology (ICT) manufacturing industry, promoting convergence between industries, proactive response to external risks through diversification of supply chains, and easing population concentration in the capital region by further fostering hub cities.
MOEF and the BOK will continue to cooperate closely by holding regular vice minister-level macroeconomic policy coordination meetings to collectively explore practical solutions for addressing structural issues in the Korean economy and restoring dynamism, as well as to devise policy alternatives.
Please refer to the attached files.