Full support promised by economy chiefs in 2020

Korea’s economic chiefs and central bank governor said stimulating the economy and stabilizing the real estate market are the top priorities for 2020 as Asia’s fourth largest economy faces shrinking exports and investment and volatile housing prices.

Finance Minister Hong Nam-ki said in his New Year’s message that he will redouble efforts to encourage economic recovery next year as the government seeks to promote investment and private consumption.

Hong also called for structural reforms in both the private and public sectors to increase productivity, with the growth potential unlikely to rise soon as the economically active population is expected to shrink.

“As I have pledged, the goal of an economic recovery should be achieved next year,” Hong said.

At the same time, the nation must provide an “answer” to questions about looming labor shortages and a rise in single-person households, Hong said.

Analysts have said that the rapidly aging population and digitalization are set to become major drags on the real economy.

Hit by a lengthy U.S.-China trade war and a cyclical slump in the memory chip sector, Korea’s economy is poised to report its weakest annual growth in a decade this year.

The nation’s economy is expected to grow 2.4 percent next year, following this year’s estimated 2 percent expansion, on the back of an anticipated recovery in the memory chip sector and a series of policy measures.

To support economic recovery next year, the government pledged that 100 trillion won ($86.5 billion) worth of investment will be made through large-scale corporate projects, public sector projects and private investment in public projects.

Financial Services Commission Chairman Eun Sung-soo vowed to ensure that financial institutions funnel more capital toward small and medium-sized companies with new technologies and growth potential.

Currently, Korean financial institutions favored mortgages and other household loans.

Financial Supervisory Service (FSS) Gov. Yoon Suk-heun said the FSS will improve the management system for household debt, noting that ample liquidity flows into the real estate market, which in turn drives up home prices and increases the potential risk of household debt.

Outstanding household debt, including credit spending, came to 1,572.7 trillion won ($1.35 trillion) as of the end of September, up 3.9 percent from a year earlier, according to the report from the Bank of Korea. The figure marks the lowest on-year increase since the second quarter of 2004, when overall household debt gained 2.7 percent from a year earlier.

The central bank chief said that the bank will maintain an accommodative monetary policy next year to support the country’s economy.

The Bank of Korea has slashed the policy rate to a record low of 1.25 percent in two quarter-point rate reductions in July and October.

BY PARK EUN JEE [park.eunjee@joongang.co.kr]