Yoo admits economy will face a tough 2017The government has decided to focus next year on risk management and stabilizing the economy amid a gloomy outlook for 2017.
According to the Ministry of Strategy and Finance on Wednesday, Finance Minister Yoo Il-ho held an minister-level meeting in which the government acknowledged a poor economic environment that will likely continue into next year.
The officials agreed that the Korean economy will be faced with external uncertainties and decelerating domestic demand, which could lower its earlier outlook for economic growth next year.
Relatively weak global economic growth, the expected raising of U.S. interest rates and the possibility of a hard-line trade policy from the Donald J. Trump administration are all factors to be wary of.
The Finance Ministry predicts the Korean economy will expand 3 percent in 2017, higher than other institutions, including the Bank of Korea, which has a 2.8 percent forecast.
Even the state-run think tank Korea Development Institute has lowered its outlook for next year to 2.4 percent while the Korea Economic Research Institute, the latest to make a revision, forecast the nation’s growth as low as 2.1 percent.
There have been growing concerns that the Korean government has been too optimistic about the state of the economy. Private institutions project next year’s growth in the mid-2 percent range or lower.
When questioned by lawmakers at the National Assembly on Tuesday, Finance Minister Yoo hinted that the government might revise its economic growth forecast for next year.
“We expected previously 3 percent growth,” Yoo told lawmakers. “But we might not be able to maintain such growth due to downward risks.”
The government will be announcing its plans for the economy on Dec. 29, which may include a lowered projection for next year’s growth.
The government announces such plans twice a year.
The government has decided to focus more on managing risks and helping households in the mid- and lower-income brackets through such measures as the front-loading of budgets and increasing investments by public institution.
The government also said it will try to restructure household debt, which is could reach a new high of over 1,300 trillion won ($1.09 trillion), and improve welfare, especially for families in which there are only one or two persons living in poverty.
BY LEE HO-JEONG [firstname.lastname@example.org]