"Signs of Economic Complex Crisis"... Yoon Elected President Urges Focus on People's Livelihoods

by Kim Hye Min

Published 15 Apr.2022 11:05(KST)

April Greenbook Also Notes "Rising Inflation Trend Expands"

[Image source=Yonhap News]

[Asia Economy Sejong=Reporters Kim Hyewon and Kim Hyemin] President-elect Yoon Seok-yeol ordered a response, saying "Signs of a complex crisis in our economy are clear." This is interpreted as President-elect Yoon indicating that the economic situation is serious, following the Bank of Korea's rate hike the previous day, which warned of prolonged high inflation and low growth.

On the 15th, President-elect Yoon attended the Presidential Transition Committee (Transition Committee) secretariat meeting and said, "Since the living conditions felt by the people are very difficult, please establish comprehensive measures to improve the economic structure, including price stabilization." He also requested, regarding the Bank of Korea's rate hike the previous day, "Even if the hike was inevitable, please carefully consider measures to minimize the damage to vulnerable groups."

President-elect Yoon emphasized responding to inflation and interest rate hikes by mentioning a ‘complex crisis’ because he judged that the impact on low-income households and consumption is serious. Since inflation is directly linked to the public's economic sentiment, it is interpreted as his intention to address it even before the new government takes office. His statement at the meeting, "The living conditions actually felt by the people will be very difficult," and "Please have the mindset that nothing is more precious than people's livelihood," aligns with this.

The government shares the same recognition. The Ministry of Economy and Finance stated in the April issue of ‘Recent Economic Trends (Green Book)’ that "Our economy continues to see improvements in exports and employment, but concerns remain about domestic demand recovery due to the spread of variant viruses and the prolonged Ukraine crisis, and inflationary pressures have expanded." This mention of inflation is the first since January 2012, when the domestic consumer price inflation rate hovered above 4%. It reflects a sense of crisis following last month's inflation rate surpassing the 4% level again for the first time in about 10 years.

As domestic and external uncertainties increase, the government is in a mood to accept adjustments to inflation and economic growth forecasts around May to June. Earlier, the government presented an economic growth forecast of 3.1% and an inflation rate of 2.2% through this year's Economic Policy Direction (Gyeongbang), but it is highly likely that revised forecasts will be announced in the mid-June second half Gyeongbang. Considering the importance to the economy, an adjustment immediately after the new government takes office cannot be ruled out. On this day, the government additionally announced inflation stabilization measures in insurance and cultural sectors, such as changes to the automobile insurance mileage special contract implementation.