Government Effectively Lowers This Year's Economic Growth Forecast from -1.1% to Around -1% (Update)

Vice Minister Ki Jae: "Strengthening Liquidity Support for Vulnerable Groups Including Small Business Owners"

Kim Yong-beom, First Vice Minister of Strategy and Finance (second from left), is presiding over the Macroeconomic and Financial Meeting held at the Seoul Federation of Banks Building on the 22nd.

[Asia Economy Reporter Kwangho Lee] The government has effectively revised down its economic growth forecast for this year from -1.1% to the -1% range. This move is interpreted as a response to the third wave of the novel coronavirus infection (COVID-19).

Kim Yong-beom, the First Vice Minister of the Ministry of Economy and Finance, held a macroeconomic and financial meeting at the Seoul Banking Hall on the 22nd and stated, "It is expected that the growth rate will record in the -1% range this year."

Considering that the government presented a -1.1% economic growth forecast for this year when announcing the 2021 Economic Policy Direction on the 17th, this essentially means a downward revision.

The -1.1% figure presented by the government was based on the assumption that the third wave of COVID-19 would be controlled to some extent. In other words, it appears to be an additional adjustment reflecting the recent spread of COVID-19.

Vice Minister Kim mentioned, "The global economy continues to suffer economic damage due to the resurgence of COVID-19."

He explained, "In the United States, new unemployment claims in the second week of December hit the highest level since September, and in the United Kingdom, due to the spread of a COVID-19 variant virus, quarantine measures in London and other areas have been raised to the highest level, and movement between major countries and the UK has been blocked, making economic damage inevitable."

He added, "Given these developments in COVID-19, as well as risk factors such as the U.S. Department of Commerce's addition of Chinese companies to the blacklist, the U.S.-China conflict, and delays in Brexit negotiations between the UK and the European Union (EU), market liquidity is shallow around the year-end and New Year period, which could increase volatility. Therefore, the government will remain vigilant and closely monitor related trends."

Vice Minister Kim stated, "Globally increased liquidity can cause side effects such as abnormal overheating of asset markets and widening polarization," and expressed, "We will strengthen liquidity support for vulnerable groups, including small business owners who are struggling due to the prolonged COVID-19 pandemic."

He continued, "We will manage market liquidity more carefully so that it is used to enhance the inclusiveness and productivity of our economy," adding, "We will enhance private investment incentives in future growth engines such as the Korean New Deal and BIG3 sectors (system semiconductors, future cars, bio-health), ensuring that market funds flow into productive sectors and remain there for a long time, and we will consider tax support measures for long-term stockholding."

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