Shin hails population milestone

First vice finance minister Shin Je-yoon warned of serious challenges ahead for the Korean economy after the population hit 50 million last Saturday, warning against too much celebration about the population growth.

“Reaching a 50 million population is a significant achievement along with the country’s $20,000 per capita gross domestic product,” Shin said at a meeting yesterday.

“Korea is the seventh country in the world to attain the two goals of growing both in terms of quantity and quality,” Shin said.

Japan was the first to do so in 1987, followed by the United States in 1988, France and Italy in 1990, Germany in 1991 and the United Kingdom in 1996.

The vice minister explained it is proven that countries with more than 50 million populations and $20,000 GDP per capita have little difficulty reaching $30,000.

But he pointed out possible downsides of the 50 million population era.

“Economic vitality will lose steam as the proportion of elderly and single households expand,” Shin said.

For businesses, domestic population growth makes it easier to achieve economies of scale. “Domestic companies will have easier access to the global market as they service a bigger domestic market with consumers with more purchasing power,” Shin said.

Shin emphasized the importance of fiscal soundness for the economy.

“The Korean government should learn a lesson from the Greek crisis and try to keep strengthening our fiscal health,” he said.

Kim Jeong-geun, a research fellow at Samsung Economic Research Institute, expressed worries about the possibility of fiscal deficits that could be incurred by increasing government spending on social welfare for the growing population.

“Financial burdens on the government will mount as the number of taxpayers decline, while those in need of financial aid increase due to low fertility rates and an aging society,” Kim said.

The population hit 40 million in 1984.

By Song Su-hyun [ssh@joongang.co.kr]