Finance nominee hints at renewed growth drive
He will need to elaborate on how to achieve robust and balanced growth in order to counter speculation that he will merely aim for more populist policies than incumbent Hyun Oh-seok.
Choi, a longtime politician who is one of President Park Geun-hye’s closest aides, was known for his focus on growth during his 16-month term as knowledge economy minister that ended in January 2011.
But in a meeting with reporters on Friday night, Choi said high growth alone is insufficient. The gauge of successful economic policies, he said, is how much growth trickles down to the general public.
In a cabinet reshuffle earlier Friday, Choi was nominated to replace Hyun, who presided over steady growth in gross domestic product since taking office in March 2013. Hyun couldn’t avoid criticism for his inability to coordinate economic policies among the government, the ruling party and the presidential office.
“Our economy is a young one that could grow further, but is showing signs of premature aging,” said Choi, who also served as former chief economist for the European Bank for Reconstruction and Development.
“If it is locked in the low-growth trap, it could become an old economy that has nothing to impress.”
The fledgling recovery of domestic consumption is slowing down due in part to the tragic sinking of the Sewol ferry in April.
Last month, the Korea Development Institute lowered its economic growth estimate for this year from 3.9 percent to 3.7 percent. Kim Joon-kyung, president of KDI, said yesterday it could further lower the estimate if sluggish consumer demand is protracted and Chinese economic growth slows.
The Korean won trading near a six-year high against the greenback and record-setting household debt could also work against Choi’s drive to find new momentum for Asia’s fourth-biggest economy.
Choi said the Korean economy can’t grow 6 to 8 percent as it did in the past, but should remain dynamic for the next five to 10 years to buffer itself in response to the effect of the country’s low birthrate and rapidly aging population.
Choi also indicated he would deregulate real estate policies.
“It is no longer middle of the summer when the real estate market was sizzling,” he said. “If we wear summer clothes in winter we catch a cold.”
Market observers say he would likely implement a series of policies aimed at easing loan-to-value (LTV) and debt-to-income (DTI) regulations, two key safety valves against a sudden house loan default.
In a National Assembly speech as the ruling Saenuri Party floor leader in April, Choi indicated the LTV and DTI ratios need to be higher than the current figures.
The DTI ratio, introduced in 2006 to cool down an overheated market, is up to 50 percent for those buying a property in Seoul and 60 percent for the surrounding metropolitan area. The LTV rate should be at 50 percent or lower for Seoul and 60 percent for the rest of the country.
Seo Seung-hwan, minister of land, infrastructure and transport, who survived the latest cabinet reshuffle, also has hinted at easing the real estate regulation and is expected to collaborate with Choi in easing the LTV and DTI regulations, although financial watchdogs such as the Financial Services Commission remain reserved about such moves.
Choi also is expected to add some gas to a three-year economic vitalization plan pursued by Park. When he served as knowledge economy minister, Choi stressed raising the competitiveness of local service industries, a key to the plan.
BY MOON GWANG-LIP [firstname.lastname@example.org]
More in Economy
Gangbuk beats Gangnam
600,000 jobs added last year, but many public or welfare
Consumer price gains pick up speed in November
Life expectancy up 7 months for Koreans born in 2019
OECD knocks tenth of a point off Korea's 2020 growth