Choo Kyung-ho "Revised South Korea Economic Growth Rate to 1.6%... Decision Based on Export, Consumption, and Investment Trends"

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho mentioned on the 11th (local time) that the South Korean economic growth rate forecast for this year, initially projected by the government at 1.6%, will be reassessed in the second half of the year after observing trends in exports, consumption, and investment to determine whether it will be positive or negative (±). Deputy Prime Minister Choo stated that, excluding specific periods such as the first and second oil shocks and the global financial crisis, this year is experiencing the most challenging economic period in the past 30 to 50 years, necessitating a comprehensive evaluation of various variables. He also reiterated that price stability remains the top priority this year.

Visiting the United States to attend the G20 Finance Ministers and Central Bank Governors Meeting, Deputy Prime Minister Choo met with accompanying reporters in New York and said, "We plan to observe various variables such as exports, consumption, and investment to determine whether we can maintain the initial forecast figures or if there will be a positive or negative alpha." This statement leaves open the possibility of adjusting the economic outlook for the second half of the year following the International Monetary Fund's (IMF) downward revision of South Korea's economic growth forecast for this year from 1.7% to 1.5%, a 0.2 percentage point decrease. The IMF has consecutively lowered South Korea's economic growth forecast four times, including in July and October last year, January this year, and most recently this month.

Deputy Prime Minister Choo explained, "The IMF releases forecasts every two to three months; initially, they were optimistic but have gradually lowered their outlook," adding, "They were optimistic about Korea's prospects but revised their view after the negative growth in the fourth quarter of last year and considering recent export trends." He continued, "Excluding specific periods such as the first and second oil shocks and the global financial crisis, this year is the worst period in the past 30 to 50 years," and noted, "Employment is stable, and inflation is somewhat under control, but the impact of high interest rates is affecting various areas, manifesting as economic slowdown."

Deputy Prime Minister Choo also said, "In its 2024 forecast, the IMF expects advanced countries to perform worse next year compared to this year, but for Korea, it anticipates growth improving from 1.5% this year to 2.4% next year," adding, "We need to observe whether the economic growth will rebound sharply or gradually increase."

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, who visited the United States to attend the G20 Finance Ministers and Central Bank Governors Meeting, is having a luncheon meeting with accompanying reporters in New York on the 11th (local time). (Photo by Ministry of Economy and Finance)

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When asked about the current status of inflation control, he said, "Inflation is generally on a downward trend," but added, "It will take time to reach the Bank of Korea's inflation target of 2%." He emphasized, "Price stability remains the priority and must not be compromised. While stabilizing prices, we also need to consider spending and economic issues." However, he noted that "the primary tool for economic stimulus is monetary and credit policy," and mentioned the direction for future economic recovery if inflation enters a stable phase.

Regarding concerns about the possibility of the global banking crisis worsening, he explained, "Generally, issues with commercial real estate and some financial companies have been somewhat resolved, but the overall message from them is that the current situation is completely different from 2008," adding, "Even if there are worries in some sectors, it is a different story from 2008, so there is no risk of a repeat of that situation." He further stated, "However, the embers may continue to exist, and even small sparks in the financial market can always affect us, so we must closely monitor and respond carefully."

On diversifying export destinations due to the trade deficit with China, he said, "We have already started diversifying to countries like Vietnam, Indonesia, and India," but added, "That does not mean we can give up on the huge market of China." When asked about the issue of Korea Electric Power Corporation (KEPCO) bond issuance arising from KEPCO's large-scale deficit, he said, "Electricity rates are being continuously discussed with various opinions from the ruling party and the government," and added, "Personally, I think a decision must be made by the end of this month at the latest. It cannot be delayed any further." Deputy Prime Minister Choo explained, "The Ministry of Economy and Finance and the Ministry of Trade, Industry and Energy will finalize the policy, but the ruling party values field opinions and is monitoring the situation while listening to experts and citizens."

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