Current expansionary measure may not be enough to prop up economy

The Korean economy extended its sluggish zero-percent
range growth into a fourth straight quarter in the July to September period. With that… and concerns over an even poorer
pace of growth in the last quarter partly due to Samsung’s global Galaxy Note 7 recall,…
calls are growing for the government to introduce more aggressive stimulus. But, do we have room for that? Shin Se-min tells us more. A call for more government spending. Korea’s current economic figures are calling
into question whether the government’s efforts to boost local spending are enough. Korea’s central bank has lowered its growth
outlook for next year to 2-point-8 percent, and the country’s all-time-low benchmark interest
rate of one-and-a-quarter percent has households taking on more debt, that has reached over
1-point-1 trillion U.S. dollars as of the end of June. That’s why experts are pointing at the government’s
fiscal measures… calling on it to take bolder action. “I think harping on that keeps the government
from doing expansionary fiscal policy, because they’re afraid that will drive up the deficit
drive of the debt. I think the situation in the macro-economics
in Korea forces us to have expansionary fiscal policy, but a lot of officials in the government
think that government cannot afford it.” A similar stance is echoed by the secretary-general
of the OECD, Angel Gurria,… who told Seoul-based Yonhap News that the country has the leeway
for more government spending to keep it from falling into a low-growth trap. He said fiscal stimulus should focus on measures
that would support Korea’s growth potential,… adding that, fiscally-speaking, Seoul still
has some room to maneuver next year. Currently, Korea’s debt-to-GDP ratio for this
year is at around 40-percent,… significantly lower than the OECD average, which last year
stood at well over 100-percent. And yet, the government’s put a leash on spending
for the country’s fiscal soundness. It plans to submit a new state budget management
bill to the parliament, in hopes of keeping the ratio of government debt-to-GDP at 45-percent
or less. Shin Se-min, Arirang News.

Leave a Reply

Your email address will not be published. Required fields are marked *