Seoul, Jan 3 (NationPress) South Korean officials are exploring strategies to support the local economy in an effort to mitigate economic challenges amid ongoing political instability and potential economic pressures from the incoming US administration.
The Acting President and Minister of Economy and Finance, Choi Sang-mok, announced on Friday that significant efforts will be made to sustain the country’s export growth and alleviate uncertainties for local enterprises, as reported by Yonhap news agency.
"The South Korean economy, which has been witnessing a sluggish recovery in domestic consumption, is now confronted with unprecedented uncertainties," Choi stated during a discussion with business representatives.
Choi revealed that the government intends to formulate systematic response strategies to tackle uncertainties in the trade landscape, particularly with the onset of a new US administration, which may enforce punitive trade measures against South Korea.
Specifically, the acting president committed to offering state support for research and development initiatives in critical sectors such as artificial intelligence and biosciences, while also vowing to remove unnecessary regulations to stimulate new economic growth, as reported by Yonhap.
On the same day, Choi also promised to provide bold and exceptional support to the nation's small and medium-sized enterprises (SMEs), including enhanced tax incentives, as cited by Xinhua news agency in a Yonhap report.
The proposed initiatives include a temporary investment tax credit for SMEs, along with an increase in the income tax deduction rate for credit card expenditures and the promotion of government-issued gift certificates to encourage domestic consumption, according to Choi.
In a further attempt to bolster economic prospects, the central bank governor emphasized the importance of flexible monetary policy implementation amidst unprecedented political and economic uncertainties, as highlighted by Yonhap.
Bank of Korea (BOK) Governor Rhee Chang-yong mentioned in a meeting with finance leaders that the central bank will determine the timing of its interest rate reductions while closely observing domestic and international risks as well as incoming economic data.
The BOK faces increasing pressure to fine-tune its monetary policy in light of possible severe economic consequences, particularly following a record-low exchange rate against the US dollar and a tragic airplane crash that further darkened the already bleak economic outlook following political turmoil surrounding the failed imposition of emergency martial law and the subsequent impeachment of President Yoon Suk-yeol.
The finance ministry anticipates the economy to expand by 1.8 percent this year, a downgrade from its previous forecast of 2.2 percent and a slowdown from last year’s estimated growth of 2.1 percent, according to Yonhap.
The ministry announced that 26 major public institutions are poised to invest 66 trillion won (approximately 45 billion US dollars) this year to bolster the government's economic stimulus initiatives, which include measures to stabilize the housing market by increasing housing supply and investing in power transmission projects as part of government-led efforts to improve infrastructure for energy, transport, and logistics, as reported by Yonhap.
