Hong Nam-ki "Targeting 4.2% Growth Rate This Year... Will Ensure Inclusive Recovery" (Comprehensive)

Government Announces Economic Policy Directions for the Second Half of 2021

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki presented this year's economic growth target for South Korea at 4.2%, stating that related policies will be established to ensure an 'inclusive recovery' that narrows disparities across society.

On the afternoon of the same day, Deputy Prime Minister Hong held a joint briefing with related agencies at the Government Complex Seoul in Gwanghwamun, Seoul, on the '2021 Second Half Economic Policy Direction,' saying, "The second half of this year will determine whether there is a full economic recovery and a return to normal life after the COVID-19 crisis, marking a period that divides the pre- and post-crisis eras." He added, "It will be a more important transitional period than ever, as it will decide the rooting of future-leading strategies such as the Korean New Deal and carbon neutrality."

He cited the policy goals for the second half of this year as ▲complete economic recovery ▲structural transformation to a leading economy, presenting an economic growth target of 4.2%, the largest increase in 11 years. He emphasized that employment will increase by 250,000, surpassing last year's decrease in employed persons (-220,000), and exports will exceed $600 billion, achieving a record high.

Deputy Prime Minister Hong explained, "We aim not just for economic recovery but for 'complete economic recovery' accompanied by employment recovery and inclusive recovery," adding, "To this end, the major policies for the second half are categorized into three: rapid and strong recovery, recovery of the livelihood economy including jobs, and inclusive recovery that narrows COVID-19 disparities." Furthermore, he said, "We have identified and arranged core tasks in two categories?securing new growth engines that will be responsible for the future of our economy and enhancing adaptability to structural changes in the economy and society such as accelerating the transition to a digital and low-carbon economy?to support the structural transformation to a leading economy."

The five focused support areas are ▲strengthening domestic demand ▲reducing disparities ▲revitalizing corporate vitality ▲restoring employment ▲supporting youth. He said, "Domestic demand is both a key to accelerating economic recovery and a factor that influences the perceived economy," and announced, "We will establish a 'win-win consumption support fund' that refunds 10% of the increase above a certain level in credit and debit card usage." This support fund is a cashback program that refunds 10% of the increase exceeding 3% monthly compared to the average card usage in the second quarter, on a monthly basis from August to October, with a limit of 300,000 KRW per person.

He continued, "We will additionally issue six types of consumption coupons and vouchers for culture, arts, performances, sports, and agricultural and marine products, implementing them gradually from August, when the first-dose vaccination rate reaches 50%," adding, "We will also significantly increase the issuance of local love and Onnuri gift certificates to revive local and neighborhood markets that have been further strained by COVID-19."

To reduce disparities after COVID-19, he emphasized the revision of the Small Business Support Act, reflecting the need for additional differentiated cash support for prohibited/restricted industries and businesses in crisis in the currently reviewed second supplementary budget (supplementary budget), and accounting for future full-scale loss compensation needs.

For companies, to resolve export logistics difficulties for small and medium-sized enterprises (SMEs) and mid-sized companies, temporary vessels will be additionally deployed on the high-demand trans-Pacific route from July (increasing from twice to four times a month), and priority allocation of shipping capacity and long-term transport contracts for SMEs and mid-sized shippers will be actively supported. Deputy Prime Minister Hong stressed, "We will ensure that contracted export volumes are not left unshipped due to lack of vessels."

He also said, "We will intensify tax and financial incentives for national strategic technologies such as semiconductors, batteries, and vaccines," and added, "We will sequentially announce and strongly promote support plans for major industries such as shipping, shipbuilding, and automobiles."

Additionally, he announced the expansion of the Korean New Deal project, with the 'New Deal Evolution Plan (Korean New Deal 2.0)' to be announced on July 14, and measures for five promising new industries including intelligent robots and the metaverse will be prepared.

Furthermore, to recover employment, he emphasized focusing policy efforts on restoring jobs to pre-COVID-19 levels and nurturing talent that leads innovation and change. Deputy Prime Minister Hong said, "We will support the creation of more than 150,000 additional jobs, focusing on new industries preferred by youth such as AI and software, as well as vulnerable sectors severely affected such as culture, arts, sports, and tourism," and explained, "The employment retention subsidy payment period for specially supported employment sectors will be extended by 90 days from 180 to 270 days."

Regarding talent development, he said, "We will focus on nurturing core talents by training 36,000 semiconductor specialists over 10 years, 413,000+ software talents over 5 years, and establishing a separate track for physician-scientists," and mentioned, "We will also promote the spread of excellent new industry training models designed and trained by large companies such as Samsung and SK and operated by the Korea Chamber of Commerce and Industry."

Finally, as a future package for youth support focusing on jobs, housing, and asset formation, he revealed plans including ▲new establishment of a youth-exclusive mother fund ▲additional supply of 5,000 jeonse rental houses in the second half of the year ▲interest-free loans of 200,000 KRW per month for homeless youth renting monthly housing ▲customized asset formation support programs, and ▲a savings plan for soldiers preparing for tomorrow. Some detailed contents will be included in the soon-to-be-announced second supplementary budget.

Deputy Prime Minister Hong emphasized, "Although the COVID-19 crisis is not yet over, as the global economy's recovery and rebound are gaining momentum, it is time to transform into an 'economy that overcomes the crisis and leaps forward,'" and stressed, "The people, companies, and government must unite and join forces."

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