Opposition's "Economic Collapse" Attack... Choo Kyung-ho: "Growth Rate More Than Doubled in Second Half of This Year"

Economic Growth Rate and Nominal GDP Rankings Drop Two Steps
Focus Only on Fiscal Soundness Despite 44 Trillion Won Tax Revenue Shortfall Concerns
Choo Kyung-ho: "Fiscal Mismanagement Must Be Avoided"

At the Planning and Finance Committee plenary session held at the National Assembly on the 22nd, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho and opposition party committee members engaged in a heated debate over whether to expand fiscal spending amid the economic downturn.

Jeong Tae-ho, a member of the Planning and Finance Committee from the Democratic Party of Korea, stated during the current affairs inquiry, "No matter how you interpret the recent economic scale, the global nominal GDP ranking has fallen from 10th to 13th, indicating a decline in economic growth rate," adding, "One might think the economy is collapsing."

Jeong continued, "Our economy is collapsing, but the Deputy Prime Minister's message is hardly visible, and the President seems uninterested in the economy," criticizing, "There is no sense of urgency from the previous administration to revive the economy."

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho and First Vice Minister Bang Ki-sun are conversing at the plenary meeting of the Planning and Finance Committee held at the National Assembly on the 22nd. Photo by Hyunmin Kim kimhyun81@

He also criticized the government for not pursuing an active fiscal policy. Jeong said, "According to the National Finance Act, the government's fiscal role during an economic downturn emphasizes supplementary budgets, but this is incomprehensible from a common-sense perspective," and added, "For economic officials, how to utilize fiscal resources is a crucial point, but the government is going in the opposite direction."

Jin Sun-mi, a Democratic Party member, also pointed out, "There is a persistent anxiety that complex and subtle adverse economic conditions are ongoing," noting, "In the first half of the year alone, there is a tax revenue shortfall of 44 trillion won. During the Lee Myung-bak and Park Geun-hye administrations, the total tax revenue shortfall over three years was 22 trillion won, so more than twice that amount has disappeared now."

Jin added, "The net profits of the two major semiconductor companies in the first half of this year have sharply declined by over 30 trillion won compared to last year, leading to a decrease in corporate tax, and the effect of tax credits for national strategic technologies cannot currently serve as an investment factor," further stating, "The reductions in comprehensive real estate tax and corporate tax following last year's amendments have not been reflected in the tax revenue shortfall."

She continued, "There were also concerns that the tax revenue shortfall could lead to reduced fiscal spending and a downward risk to growth becoming a reality. Ultimately, growth can only be sustainable if exports or tax revenues increase or fiscal investment expands," criticizing, "In the end, fiscal investment needs to be considered, but the minister's conviction is solely focused on fiscal soundness."

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is attending the plenary meeting of the Planning and Finance Committee held at the National Assembly on the 22nd. Photo by Kim Hyun-min kimhyun81@

In response, Deputy Prime Minister Choo said, "There is concern that the economy is collapsing and that there is no future because the recent economic growth rate has somewhat declined, but to put it broadly, our economy experienced negative growth during COVID-19 and then returned to positive growth," expressing confidence that "the growth rate in the second half of this year will be at least twice that of the first half."

He added, "Our fiscal situation is such that even if the economy is somewhat difficult now, it is not a situation where we should recklessly incur debt to increase growth by 0.1 to 0.2%," explaining, "Our national economy is different from that of the United States and Japan. Considering this, the urgent task now is to create conditions so that the private sector can be more dynamic, companies can more vigorously enter the global market, invest, and create jobs."

Regarding concerns about tax revenue shortfalls, he said, "When preparing this budget, we decided to reexamine budget projects from zero base and conducted a very intensive restructuring of expenditures in areas with low efficiency," explaining, "In that process, we prioritized and increased investment in areas that create our food supply and promote technological development."

◆ Jamboree Disruption: Local Government Responsibility vs. Central Government Blame-Shifting

The ruling and opposition parties continued their dispute over the cause of the Saemangeum Jamboree disruption. The People Power Party pointed out that the issue stemmed from the local government's reckless project execution, while the Democratic Party argued that shifting the central government's responsibility onto local governments is inappropriate.

Jo Hae-jin of the People Power Party said, "It has been over 30 years since local autonomy was implemented. Personally, I believe we need to deeply examine and consider its sustainability. At the current pace, I have serious doubts about its sustainability."

Jo added, "The purpose of local autonomy was to reduce the gap between the metropolitan area and provinces and to promote growth in local areas, but the result is that local areas are not just declining and lagging but have reached a stage of extinction where their existence is threatened," emphasizing, "At the national level, there needs to be a reevaluation of the merits and demerits of local autonomy, including issues like regional consolidation and converting elected positions to appointed ones, and institutional improvements are necessary."

On the other hand, Han Byung-do of the Democratic Party said, "What worries me is the movement to disparage Jeonbuk and its residents due to the Jamboree disruption," rebutting, "Some in the ruling party claim that the Moon Jae-in administration exploited Jeonbuk's SOC (social overhead capital) tools such as the Saemangeum international airport, highways, and new ports, but this is fake news." He added, "The Saemangeum airport project started in 1987, and no national project has been left neglected like this," expressing concern about the possibility of related costs being cut in next year's budget.

Bank of Korea Governor Lee Chang-yang and Commissioner of the National Tax Service Kim Chang-gi are conversing at the full meeting of the Planning and Finance Committee held at the National Assembly on the 22nd. Photo by Kim Hyun-min kimhyun81@

Jeong Tae-ho also said, "The Jamboree is a national event hosted by South Korea under the World Scout Movement and is an event involving local governments. It is not solely a local government event," rebutting, "The decision to host the World Jamboree in Korea and to select the Saemangeum area was made during President Park Geun-hye's administration. The Moon Jae-in administration conducted the hosting activities based on the decision made by the Park Geun-hye administration. Trying to shift responsibility to local governments repeatedly is a stance of the central government that hosted the event."

Jang Hye-young of the Justice Party criticized both parties regarding the Jamboree disruption. Jang said, "Many people point to the main cause of failure as the forced development projects under the pretext of the Jamboree, rather than the Jamboree itself," criticizing, "Jeonbuk and the Democratic Party seem unwilling to acknowledge the failure of the reckless development push in Saemangeum, and the government and ruling party use Jeonbuk as a scapegoat to shield themselves from failure, even attacking the Saemangeum airport, but they do not seem to intend to cancel the project. Under these circumstances, I believe a second Saemangeum Jamboree failure could be repeated."

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