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Seoul to max out fiscal easing next year: minister

Economy 09:06 August 26, 2019

By Kim Kwang-tae

SEJONG, Aug. 26 (Yonhap) -- South Korea's finance minister said Monday the country will implement a "greater and aggressive" fiscal policy next year to deal with a series of economic headwinds, such as an escalating trade row between the United States and China, and another trade tussle with Japan.

Hong Nam-ki, the minister of economy and finance, said the government has drafted an expansionary budget next year, although a temporary fiscal deficit is likely.

"An aggressive fiscal role is more important than ever before," Hong said in a meeting with lawmakers of the ruling Democratic Party for consultations on next year's budget before submitting it to the parliament next month for approval.

South Korea is raising next year's budget to 513 trillion won (US$423.5 billion), up 9 percent from 2019.

The draft budget, if passed by the National Assembly, would raise South Korea's national debt to the upper end of 39 percent of its gross domestic product in 2020, compared with 37.2 percent in 2019.

The move comes amid concerns that trade frictions between the United States and China, along with Japan's expanded trade restrictions against South Korea, could further weigh on the South Korean economy already grappling with slowing exports and weak domestic demand.

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 has 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.


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