"Twin Deficits" Realized... Deputy Finance Minister: "Temporary Worsening of Current Account Balance in April"

The 3rd Economic Relations Vice Ministers' Meeting

Bang Gi-seon, First Vice Minister of the Ministry of Economy and Finance, is presiding over the 3rd Economic Relations Vice Ministers' Meeting held at the Government Seoul Office Building on the 3rd. 2022.6.3 [Photo by Yonhap News]

[Asia Economy Sejong=Reporter Son Seon-hee] Bang Gi-seon, the 1st Vice Minister of Strategy and Finance, said on the 3rd regarding the 'April Current Account Balance' to be announced next week, "There is a possibility of some deterioration due to a temporary factor caused by the concentration of foreign dividend payments every April." It is expected that the first 'twin deficit' in 25 years since the 1997 foreign exchange crisis will become a reality amid an already deficit fiscal balance.

Vice Minister Bang said this while presiding over the Economic Relations Vice Ministers' Meeting at the Government Seoul Office in the morning. However, he added, "It is expected that the (current account balance) will improve again in May," and "Major institutions are forecasting an annual surplus of around 50 billion dollars." He also said, "We will do our best to maintain a current account surplus in the future." This was a clear line drawn against some pessimistic views that the annual current account balance could also record a deficit.

Meanwhile, Statistics Korea previously announced that the consumer price inflation rate in May was 5.4%. This is the highest in nearly 14 years since August 2008 (5.6%). Vice Minister Bang said, "We take the current inflation situation very seriously," and analyzed, "In May, in addition to external factors such as disruptions in the supply chains of energy, raw materials, and grains, the recovery of domestic demand due to the easing of quarantine measures became visible, which further increased the inflation rate."

In this regard, the government announced a livelihood stabilization plan focusing on cost reduction on the 30th of last month. Vice Minister Bang emphasized, "Now, what matters is speed and perception," and said, "It is important that government support such as the application of allocation tariffs and exemption of value-added tax to alleviate the burden of rising costs actually leads to a reduction in consumer prices." He then urged the attendees, "Please concentrate all your capabilities to closely communicate and cooperate with the industry so that the public can tangibly feel the effects of the measures."

Vice Minister Bang stated, "We will also pay special attention to managing agricultural and livestock products, which have recently shown an upward trend and have high price volatility seasonally in summer," and added, "We will stockpile a total of 34,000 tons of cabbage, radish, garlic, and onions (for June to July) in preparation for unstable factors such as adverse summer weather." He also said, "Regarding livestock products, we will thoroughly manage price instability factors, including emergency quarantine measures against African Swine Fever (ASF) recently occurring in Hongcheon, Gangwon Province."

Meanwhile, the government plans to announce the new administration's first economic policy direction within this month. Vice Minister Bang said, "It will include various policy tasks for our economy to achieve a new leap forward, such as stabilizing livelihoods and prices, revitalizing the private sector, and improving the economic structure," and urged, "All economic ministries should unite with extraordinary determination."

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