Finance minister apologizes for weak economy

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Finance minister apologizes for weak economy

Finance Minister Hong Nam-ki on Monday apologized for disappointing economic growth in the first quarter and promised a government economic stimulus plan by June.

He also said the government is trying to stabilize gas prices rising as a result of U.S. sanctions on Iran.

“As an economics minister, I am sorry and accept the current situation heavily,” Hong said during an economics meeting.

He said the government will be focusing in May and June on coming up with measures to boost investments in the private sector, including microchip businesses like foundries and integrated device manufacturing (IDM).

“The government will come up with measures that will lead to private investments not only by conglomerates but also by SMEs,” Hong said.

Last week, the Bank of Korea released a growth report for the first quarter that was worse than expected.

While the economy grew 1.8 percent compared to the first three months of 2018, the slowest growth in a decade, it actually dropped 0.3 percent when compared to the last quarter of last year. It was the first time the economy retreated on a quarterly basis since it fell 0.2 percent in the fourth quarter of 2017. It was also the sharpest drop since the fourth quarter of 2008, when it shrank 3.3 percent compared to the previous month.

Hong said the government is already working on measures to support semiconductors, which are crucial to next generation industries such as artificial intelligence, the Internet of Things and autonomous vehicles.

“Despite the huge potential for system semiconductors, we only have a [global] market share of 3 percent,” Hong said. “Recently, Samsung Group announced it will be investing 133 trillion won [$114.6 billion] to build up global competitiveness in system semiconductors and hiring 15,000 people.”

Hong added that the government will work on stimulating the domestic market including improvements in services.

“We will come up with innovative strategic measures for Korea’s tourism industry,” Hong said.

On the impact of the U.S. sanction on Iran, Hong promised no major disruptions since the Korean government is prepared for the situation.

On April 22, Washington said eight countries previously given waivers on sanctions on imports of Iranian oil, including Korea, will have to comply starting May 2.

“We will no longer grant exemptions,” said U.S. Secretary of State Mike Pompeo.

Hong said the government is prepared because the U.S. government announced its intention to put back sanctions last year.

“While we have been actively negotiating with the United States [on allowing Korea to import Iranian oil], we have been preparing with various scenario in mind.”

He said Korea is already reducing its imports of Iranian oil, and even if the ban goes into effect in May, its impact on the Korean economy will be limited.

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