Kim Yong-beom, Deputy Minister of Economy and Finance, "Fiscal Policy Must Play an Active Role in the COVID-19 Economic Crisis"

[Image source=Yonhap News]

[Asia Economy Reporter Kang Nahum] Kim Yong-beom, the 1st Vice Minister of the Ministry of Economy and Finance, emphasized 'mid- to long-term fiscal soundness management' as a measure to overcome the economic crisis caused by the novel coronavirus disease (COVID-19). In particular, he stressed the active role of fiscal policy using the coined term ABC (AidㆍBoostㆍChange).

Vice Minister Kim attended the 'Parliamentarians Studying the Economy Group (Gyeonggukjimo)' of the Democratic Party held at the National Assembly on the morning of the day and said, "It is important to manage mid- to long-term fiscal soundness in preparation for the post-COVID-19 era." Gyeonggukjimo is an economic study group centered on economic experts within the party, such as Representative Hong Young-pyo and Representative Choi Un-yeol, and 57 participants including current Democratic Party lawmakers and elected members of the Together Citizens' Party attended the meeting.

In his lecture, Vice Minister Kim said, "We must overcome the economic crisis through full support (Aid) for companies, small business owners, and households struggling due to COVID-19, and a boom-up (Boost) for a V-shaped rebound after the crisis ends." He added, "Issues highlighted by COVID-19, such as employment blind spots and the importance of manufacturing, should be used as an opportunity for structural reform (Change)."

Regarding manufacturing, he diagnosed, "The COVID-19 pandemic exposed the limitations of the advanced service industry as the manufacturing base collapsed," and "The supply chain was disrupted due to COVID-19, which signifies the paradox of global division of labor." He continued, "The government should first support the return of overseas-invested companies and re-examine the incentive system for returning companies," and "An organization for purchasing corporate bonds and commercial papers (CP) is also required to protect key industries."

Vice Minister Kim also cited the support methods of the U.S. Federal Reserve (Fed) as an example and argued that a new role for the central bank needs to be sought. He said, "The U.S. Fed is conducting virtually unlimited quantitative easing on government bonds, mortgage-backed securities (MBS), etc., and is collaborating with the Treasury Department to provide financial support totaling $2.3 trillion, including purchases of corporate bonds and CPs," adding, "This highlights the importance of cooperation between the Bank of Korea and the government."

Regarding the current Korean economy, Vice Minister Kim evaluated, "Based on the strength of manufacturing, an excellent public healthcare system, and the advantages of information technology (IT), the GDP growth rate's 'holding on' performance is relatively good." However, he forecasted about exports, "The critical point will start from now," and said, "Even last year, the global trade volume was the lowest since the global financial crisis in terms of quantity. This year is expected to worsen further compared to the global financial crisis. The impact will become full-scale from April."

On employment, he said, "An unprecedentedly rapid and large-scale adjustment has begun," and added, "Considering the lagging nature of employment in the economic cycle, the shock to exports and manufacturing has not yet been fully reflected."

This content was produced with the assistance of AI translation services.