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S. Korea may miss growth target on trade tensions: finance minister

All News 17:30 August 22, 2019

By Kim Kwang-tae

SEJONG, Aug. 22 (Yonhap) -- South Korea may not achieve its growth target this year, the finance minister suggested Thursday, as exports slowed amid trade tensions with Japan and an ongoing trade conflict between the United States and China.

When asked by a lawmaker whether South Korea can pull off its 2.4 percent or 2.5 percent growth target, Hong Nam-ki said in a parliamentary session that "it won't be easy, given recent developments," in an apparent reference to Japan's export curbs against South Korea and the American-Sino trade row.

Hong Nam-ki, the minister of economy and finance, speaks in a parliamentary session on Aug. 22, 2019. (Yonhap)

Hong Nam-ki, the minister of economy and finance, speaks in a parliamentary session on Aug. 22, 2019. (Yonhap)

Japan has imposed tighter regulations on exports to South Korea of three materials -- resist, etching gas and fluorinated polyimide -- that are critical for the production of semiconductors and flexible displays.

Japan also removed South Korea from its "whitelist" of trusted trading partners in retaliation against last year's South Korean Supreme Court rulings ordering Japanese firms to compensate South Korean victims of forced labor during Japan's 1910-45 colonization of the Korean Peninsula.

In July, South Korea slashed its economic growth outlook for this year to between 2.4 percent and 2.5 percent from its previous forecast of between 2.6 percent and 2.7 percent in December, citing weak exports and sluggish investment.

Global rating agency Standard & Poor's has sharply cut its growth forecast for South Korea's economy this year to 2 percent from its previous forecast of 2.4 percent in April due to rising uncertainty about the global trade outlook and weaker consumption.

South Korea will quickly spend most of 273.2 billion won (US$226.4 million) set aside as part of its efforts to cope with Japan's export curbs against Seoul within next month, the finance ministry said Thursday.

The spending, meant to develop key industrial materials and parts, is part of a 5.83 trillion-won extra budget meant to prop up the slowing economy and tackle Japan's export curbs against South Korea.

The ministry said South Korea will quickly file a complaint with the World Trade Organization (WTO) over Japan's export restrictions, though it did not provide a specific time frame.

Hong also said the government is considering increasing next year's budget to more than 510 trillion won to help revitalize the economy, setting aside 22.4 trillion won in research and development spending.

He said earlier in the day that South Korea's national debt could rise to the upper end of 39 percent of its gross domestic product (GDP) in 2020 if the parliament approves the government's budget proposal.

The government has budgeted 469.6 trillion won for 2019.


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