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(News Focus) S. Korea's new economic chief tasked with reviving economy

All Headlines 18:31 May 21, 2017

By Choi Kyong-ae

Seoul, May 21 (Yonhap) -- The main task given to South Korea's next finance minister is reviving the sluggish domestic consumption in Asia's fourth-biggest economy amid years of low growth, observers here said Sunday.

South Korea's economy has reported growth of less than 3 percent for the past four years through 2016, except for the 3.3 percent growth tallied in 2014.

On Sunday, President Moon Jae-in tapped Ajou University President Kim Dong-yeon as deputy prime minister for economy and head of the finance ministry due to his decades-long expertise and experience in economic policymaking.

As for the reasons of the nomination, President Moon said Kim will exercise a pivotal role in stimulating the lackluster Korean economy and drawing up countermeasures to cope with major challenges such as low growth, the low birth rate and a rapidly aging population.

Moon made the remarks during a press conference on his picks for key cabinet positions earlier in the day.

The nominee received high points in the screening process when it came to "comprehensive risk management and ability to move forward on change," the chief executive said.

Finance minister nominee Kim Dong-yeon. (Yonhap)

As the Moon government focuses on generating jobs to boost domestic consumption, the nominee is expected to come up with a big-picture solution not only to further increase exports and investment, but also to tackle the shrinking working-age population.

In its "income-led growth" initiative, the Moon government aims to use job creation to fuel household income, which can stimulate spending.

Increased household consumption could drive up earnings for companies and allow them to make more investment that can naturally lead to the hiring of more workers.

A rise in disposable income often leads to increased spending and growth.

During his campaign, President Moon pledged to ask parliament for 10 trillion won (US$8.9 billion) in supplementary budget to help generate jobs.

Moon vowed to create 810,000 new quality jobs and remove all nonregular jobs in the public sector during his five-year presidency that began on May 10.

But experts advised it is more desirable to help companies regain their financial health so they can hire workers instead of the government injecting a huge amount of taxpayers' money mainly to get the public sector to employ people.

Exports and corporate investment have been on the rise but they still fall short of achieving meaningful growth that relies heavily on exports to generate growth. Low birth rates and an aging population still remain major worries for the new government, local economists have said.

Meanwhile, with Kim's nomination as economic policy chief on top of the appointment of two progressive economists to key positions, observers here said the new government is sending a clear signal of its intent to shift its overall policy towards a more liberal stance.

Earlier in the day, Moon also named Chang Ha-sung his new chief for policy, a newly created post at the presidential office Cheong Wa Dae that is tasked with coordinating various reform measures. Chang, who teaches economics at Korea University, has taken issue with the "economic inequality" prevalent in South Korean society.

The president's nomination of former civic group activist Kim Sang-jo as head of the antitrust regulator Wednesday also shows the government's determination to show zero tolerance toward unfair market practices largely carried out by big family-run conglomerates such as Samsung and Hyundai Motor Group.


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