Keep strong, carry on and consume

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Keep strong, carry on and consume

President Moon Jae-in offered a pep talk along with a plan on Monday as he laid out the government’s economic agenda in the face of the coronavirus outbreak.

Breaking with norms, Moon’s comments were aired live to the nation.

“Now we have to focus all of our resources in revitalizing the economy while protecting the safety of the public,” President Moon said Monday during a meeting held for department briefings on economic plans for the year, which was held at the Blue House.

The Ministry of Economy and Finance, the Ministry of Trade, Industry and Energy, the Ministry of SMEs and Startups and the Financial Services Commission offered up their thoughts. All focused on innovation.

The president’s comments were televised, which is unusual for a government briefing. This was seen as a message to the public designed to encourage consumption despite the outbreak, which has devastated central China and seems to be threatening other parts of the world.

President Moon praised the government’s efforts.

Although the Korean economy grew at the slowest pace in a decade in 2019, several economic indicators at the end of last year, including exports, indicated a turnaround.

“Especially last year [the government], through aggressive fiscal policies and preemptive actions, was able to find the foothold for an economic recovery even when faced with external challenges such as the global economic downturn and Japan’s export restrictions,” Moon said. “[The government] has pushed on for innovation, inclusiveness and fairness and for fundamental changes in [Korea’s] economic structure.”

He particularly praised joint efforts by the government, companies and the public in lowering the dependency on three key materials from Japan.

“It was a good example of turning a crisis into an opportunity,” Moon said. Moon raised concerns about the impact of the Wuhan coronavirus, which the WHO is calling Covid-19, on the Korean economy.

“The economic damage from Covid-19 feels to be larger than that of the MERS [Middle East respiratory syndrome] in 2015,” Moon said.

The president said he believed that fear and worries over the virus seem to be excessive and are affecting the public’s spending and leisure activities.

“The government will do its best in its quarantining efforts while keeping our guard up until the end,” Moon said. “I ask the public to trust the government, and while each and every person should follow the safety rules, they should return to their daily activities and economic activities.”

The focus of the plans from the government departments was innovations. The plans this year include expanding the number of smart plants to 30,000 by 2022 while raising this year’s research and development (R&D) investment from last year’s 20.5 trillion won ($17.3 billion) to 24.2 trillion won.

The government says it will expand efforts in leading technologies, including 5G, big data and electric vehicles, increasing the number of artificial intelligence graduate schools to eight, contributing to the independent development of key semiconductor and display components, leading the global markets on the hydrogen economy, diverting real estate investments to innovative companies and innovating regulations for fintech companies.

Finance Minister Hong Nam-ki said the government will announce this month’s measures that will not only encourage investment, boost the domestic economy and expand exports but also contribute to economic recovery amid the unexpected impact from the coronavirus.

The finance minister said the economic sentiment as well as spending have been more affected by the fear of the recent coronavirus compared to the MERS outbreak five years ago despite the fact that no lives have been lost in Korea in this crisis.

He said the worries and fears over the outbreak have been excessive.

“Because of Covid-19, the service industry’s earnings have shrunk because of the drop in the number of tourists visiting Korea, while the domestic economy has slowed as spending has dropped due to people refraining from outdoor activities and consumer confidence being affected,” Hong said. “Major industrial production and exports have also been affected due to the disruption of China’s value chain.”

In a report released Sunday, Moody’s lowered its economic growth outlook for Korea along with the outlook for other G-20 economies. Its projection for Korea’s economic growth in 2020 was taken down to 1.9 percent from the previous estimate of 2.1 percent.

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