With the start of 2025, the government today announced its new economic policy plans.
A key focus is on stabilizing the economy amid both external and internal uncertainties.
Our economics correspondent Lee Soo-jin joins us in the studio.
Soojin,.. what does the government think the economy will look like this year?
Well, South Korea is currently going through a turbulent period, with the ongoing impeachment trial of President Yoon, and the appointment of Finance Minister Choi Sang-mok as acting president.
And this week is also a national mourning period for the Jeju Air plane crash.
The crash which happened on Sunday morning, is also why the release of economic policy plans for this year, originally scheduled for Monday, was pushed back to today.
This is why it comes as no surprise that the government is anticipating that people’s livelihoods will continue to face difficulties as downside risks to the economy grow due to both external and domestic uncertainties.
External risks that the government is monitoring include the implementation of tariffs that may target South Korea’s exports, with the inauguration of U.S. President Donald Trump, as tariffs from his previous administration imposed financial pressure on key industries.
And as shifts in trade policies are expected, the government is also aware that this will also have a broader impact on supply chains.
While domestic demand, which the state-run Korea Development Bank think tank has assessed as “weak” for more than a year, is expected to see some improvement, export growth is expected to slow.
And people are expected to continue feeling that the economy is sluggish, due to the ongoing political turmoil, despite the downward trend in consumer prices.
With this assessment, the government is projecting the economy to grow only 1-point-8 percent in 2025, compared to 2-point-1 percent growth in 2024.
How will the economic policy plans for this year mitigate these concerns?
Just like you mentioned in the beginning, the overarching goal of this year’s plans is to ensure that the economy is stable despite external and internal factors.
The policies are focused on four key areas: revitalizing people’s livelihoods, managing external credibility, responding to trade uncertainties, and strengthening industrial competitiveness.
Here’s what Acting President and Finance Minister Choi Sang-mok had to say earlier today.
“The growth rate is expected to decline to around 1-point-8 percent, exacerbating challenges for livelihoods and raising concerns about external creditworthiness. As such, the government has drafted the 2025 economic policy plan with the goal of stabilizing the economy.”
To improve livelihoods, the government will allocate 70 percent, of 85 trillion won, or nearly 60 billion U.S. dollars and the largest ever amount allocated in the first half of the year, to fund various projects that include helping young adults who are seeking employment, lowering grocery prices, and supporting small business owners.
Nearly 8 billion dollars will be spent on lowering livelihood costs by providing discounts for agricultural and livestock products and energy vouchers.
The government is also focusing on maintaining external credibility by providing more than 130 million dollars in cash subsidies in the first half of the year to encourage foreign investment.
The acting president also said the government will continue to work towards making sure that Korea’s WGBI inclusion and the corporate value-up program are carried out without setbacks.
And what are plans for trade and industries?
Right so, external factors pose significant challenges to the nation’s economy as much as internal factors.
With one of them being the incoming Trump administration, the government is planning to hold meetings with both the economic and foreign affairs ministers.
And as there is concern about a slowdown in exports, nearly 2 billion dollars will be allocated to support exports.
Corporate tax and value-added tax benefits will also be provided for export-oriented SMEs.
In order to maintain industrial competitiveness amid various external uncertainties, the government will support the enactment of the “Special Semiconductor Act” which seeks to strengthen global competitiveness by exempting R&D employees from the 52-hour workweek restriction, and allowing direct government subsidies for chip companies during the initial investment stages.
As part of efforts to become one of the top three leading countries in the AI industry,.. the government plans to set up a “National AI Computing Center” and release an outline for developing and attracting AI talent in the first half of the year.
All right, we’ll be keeping an eye on the policies that are rolled out this year.
Thank you for coming in today.
Thanks for having me.
Source : Arirang TV, https://www.arirang.com/news/view?id=279564
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