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Govt. to unveil new measures to stimulate consumption

South Korea's finance minister said Thursday that the government will announce a set of stimulus policies later this month to boost domestic demand in a bid to prop up Asia's fourth-largest economy.

"The government will strengthen policy efforts to revive domestic demand and improve the people's livelihoods," Finance Minister Yoo Il-ho said in an economy-related ministers' meeting in Seoul. "This month, we will come up with packages to revive consumer confidence and boost household income."

South Korea's Finance Minister Yoo Il-ho (center) speaks at an economy-related ministers' meeting in Seoul on Feb. 16, 2017. (Yonhap)
South Korea's Finance Minister Yoo Il-ho (center) speaks at an economy-related ministers' meeting in Seoul on Feb. 16, 2017. (Yonhap)

The South Korean economy has been in an apparent slump in recent months due largely to slowed private consumption.

In the fourth quarter of last year, the gross domestic product gained 0.4 percent on-quarter, slowing down from a 0.6-percent growth in the previous quarter.

Private consumption edged up 0.2 percent over the October-December period, sharply down from 0.5 percent tallied three months earlier and 1 percent in the second quarter.

Construction investment, which had played a big role in leading GDP growth for years, fell 1.7 percent in the three months through December, marking the first on-quarter drop in two years.

Exports, which account for more than 50 percent of the total GDP, declined 0.1 percent over the same period.

Finance Minister Yoo said the government is also working on policies to bolster investment and exports and increase employment.

The South Korean government earlier vowed to spend more than 60 percent of its 400 trillion budget for 2017 in the first half to meet the growth target of 2.6 percent through stronger fiscal intervention from the beginning of the year. 

The top economic policymaker said he is looking closely into the recent steep appreciation of the won against the Japanese yen.

The value of the won rose to a one-year high of 999 won per 100 yen Wednesday amid a worldwide trend of the weakening US dollar.

"We are checking the foreign exchange rate and seeking available measures," Yoo said. "We have to watch whether this trend will continue further."

Since the inauguration of US President Donald Trump, the won and the yen have gained ground against the US dollar. It is sparked by intensified pressure by the new US government, which is considering designating South Korea and Japan as currency manipulators, citing a massive current account surplus.

Following the Washington-Tokyo summit last week, however, the pace of the yen's revaluation against the US dollar slowed down to some extent.

"Foreign exchange rates are decided by the market, and the authorities just fine-tune sudden wide changes," he said. "It is impossible for a government to do something with the foreign exchange rate in order to increase its current account surplus."

On Wednesday, the South Korean government sent a letter of protest to the international daily newspaper Financial Times over its recent article that the country has intentionally manipulated the foreign exchange rate. (Yonhap)

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