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(LEAD) S. Korea's finance minister vows frontloading to prop up economy

All News 10:46 January 04, 2017

(ATTN: UPDATES with finance minister's comments in last 7 paras)

SEJONG, Jan. 4 (Yonhap) -- South Korea's finance minister said Wednesday that the government will make all-out efforts to frontload its budget spending in the first quarter to pre-emptively cope with rising economic uncertainties at home and abroad.

"Facing strong headwinds inside and outside the country, the South Korean economy will likely lose recovery momentum," Finance Minister Yoo Il-ho said in a meeting on fiscal spending in Seoul. "The government will beef up fiscal intervention as a trigger for economic reinvigoration and a stepping stone for further development."

The top economic policymaker has repeated such comments on a stronger fiscal role in propping up the economy as Asia's fourth-largest economy saw its growth slow down in the second half of 2016, with it expanding 2.6 percent on-year in the third quarter and 1.9 percent in the fourth quarter.

The global economic downturn and U.S.-led uncertainties, such as rate hikes and a government change, will deal a blow to the export-oriented economy this year, while political scandals involving President Park Guen-hye also weighed heavily on the South Korean economy.

The Seoul government forecast that the country will grow 2.6 percent in 2017, down 0.4 percentage point from its earlier growth prediction of 3 percent.

In order to stop the downside cycle, the government will pour more than 30 percent of the 400.5 trillion-won budget earmarked for 2017 in the first three months of the year.

The finance minister asked the government ministry and agencies to execute the frontloaded budget as scheduled.

"There are some 7,000 projects worth 400 trillion won this year," said Yoo. "Each minister should do its best to carry out the projects in order to help the economy get on the recovering track."

South Korea's Finance Minister Yoo Il-ho (2nd from R) speaks at a meeting on fiscal spending in Seoul on Jan. 4, 2016. (Yonhap)

In a separate ministerial-level meeting, the government said the finance minister will visit New York on Jan. 9 to brief foreign investors on the Korean economy and reform measures as part of efforts to boost investment from the United States.

"In New York, I will share views on the economic situation with foreign investors and media and explain our major policy plans with them," Yoo said.

It is the second time since his inauguration that the South Korean government has held an investor relations event in the U.S. The first took place in April last year.

At the same time, officials of the foreign ministry will meet with their U.S. counterparts in Washington D.C. as part of efforts to build an economic relationship with the incoming Donald Trump administration.

Also, Seoul and Washington will have talks on the bilateral free trade agreement in Seoul on Jan. 12 to fine-tune pending trade issues between the two nations.

"We're trying to stress the importance of Korea-U.S. trade partnership and ask the incumbent and incoming U.S. governments to remain consistent with their trade policies," said Yoo.


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