On June 10, Deputy Prime Minister and Minister of Finance and Economy Koo Yun Cheol chaired the Expanded Meeting on Macroeconomic, Fiscal and Financial Issues at the Government Complex Seoul, attended by Minister of Planning and Budget Park Hong Geun, Financial Services Commission Chairman Lee Eok Won, and Bank of Korea Governor Shin Hyun Song, to review key issues in the macroeconomic, fiscal and financial sectors as well as risks in vulnerable areas and discuss policy responses.
The meeting marked an expansion of the Meeting on Macroeconomic, Fiscal and Financial Issues launched in April, with the participation of the Governor of the Bank of Korea to facilitate a comprehensive review of recent macroeconomic and financial market conditions. Going forward, the government plans to convene the expanded meeting on a flexible basis, inviting relevant agencies as needed depending on the agenda and policy issues at hand.
The participants assessed that the Korean economy has continued to maintain solid overall momentum. Nominal GDP rose by 17.1 percent year-on-year in the first quarter, marking the highest growth rate since the third quarter of 1995 (19.2 percent), supported by improved corporate earnings driven by strong semiconductor performance. The positive trend has continued into the second quarter, with exports rising by 53.2 percent from a year earlier in May to reach a record high and the current account surplus widening further. Taken together, these developments underscore the strength of the Korean economy’s fundamentals and external credibility.
The participants agreed that, given the favorable economic conditions and the resulting increase in expected government revenues, the expanded fiscal space should be utilized for forward-looking investments aimed at raising the economy’s potential growth rate. They also emphasized that fiscal policy should play an active role in addressing socioeconomic disparities and easing the burden on households arising from higher prices. In addition, they shared the view that reforms to the fiscal structure and expenditure restructuring are necessary to ensure the efficient management of public finances.
Furthermore, it was assessed that increased volatility in financial conditions could place greater strain on vulnerable sectors. Particular attention would be paid to the impact on low-income and low-credit borrowers and small business owners whose debt-servicing burdens may rise as interest rates increase; small importers and import-processing firms exposed to exchange rate fluctuations; and risks stemming from leveraged investments amid heightened stock market volatility. They also agreed to maintain close coordination among relevant agencies to safeguard livelihoods and manage potential risks.
The participants emphasized the importance of close policy coordination during periods of significant shifts in macroeconomic conditions, such as the current one, and agreed to further strengthen cooperation among relevant agencies in formulating the economic growth strategy for the second half of the year and implementing future policies.
Please refer to the attached files.
