Hankyung Research Institute "South Korea's Economy to Slightly Recover Next Year... Excessive Optimism Should Be Cautioned"

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is announcing the 2021 Economic Policy Direction on the afternoon of the 17th at the Joint Briefing Room of the Government Seoul Office in Jongno-gu, Seoul. Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is announcing the 2021 Economic Policy Direction on the afternoon of the 17th at the Joint Briefing Room of the Government Seoul Office in Jongno-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Dongwoo Lee] The Korea Economic Research Institute (KERI) stated on the 17th that while the Korean economy is expected to recover somewhat next year according to the government's '2021 Economic Policy Direction,' excessive optimism should be cautioned against.

In a commentary released that day, KERI said, "Next year, our economy is expected to recover somewhat due to the base effect from this year's negative growth and the anticipated increase in global trade volume next year," but emphasized, "Since downside risks such as continued sluggish private consumption, weakened export competitiveness of key industries excluding semiconductors, and growth slowdown due to low birthrate and aging population remain, excessive optimism should be avoided."

KERI warned, "In particular, global debt has sharply increased during the response to the novel coronavirus disease (COVID-19), which is likely to act as a trigger for a new crisis."

It added, "In South Korea, household debt is already at a serious level, and government debt is rapidly increasing, so even more caution is required," urging, "The government needs to be alert to this and prepare countermeasures."

Choo Kwang-ho, Director of Economic Policy at KERI, said, "Despite unprecedented adverse conditions caused by COVID-19, companies are struggling to maintain investment and employment, but recent successive legislation such as the three corporate regulation laws and labor-related laws raises concerns about further deterioration of the business environment," and requested, "We ask for active efforts in shifting corporate policies and proactive regulatory reforms to revive private sector vitality and foster future growth industries."

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