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(LEAD) Finance minister vows to spur economic recovery momentum

All News 14:51 December 30, 2019

(ATTN: ADDS quotes, details in last 6 paras, new photo)
By Kim Deok-hyun

SEJONG, Dec. 30 (Yonhap) -- Finance Minister Hong Nam-ki said Monday that reviving the nation's sluggish economy is the top priority for his ministry next year, while calling for the private sector to boost investment.

Hong also described the November industrial output, which gained 0.4 percent and rebounded from a 0.4 percent decline a month earlier, as a "positive" sign that the economy may have hit bottom.

"My top priority for next year is to achieve an economic recovery and rebound," Hong said in his end-of-year press conference.

Hit by a lengthy U.S.-China trade war and a cyclical slump in the memory chip sector, Korea's economy is poised to report its weakest annual growth in a decade this year.

The nation's economy is expected to grow 2.4 percent next year, following this year's estimated 2 percent expansion, on the back of an anticipated recovery in the memory chip sector and a series of policy measures.

Asked whether the economy could grow 2 percent this year, Hong replied that it depends on how the private sector contributed to growth in the fourth quarter of this year.

Finance Minister Hong Nam-ki speaks at his end-of-year press conference on Dec. 30, 2019. (Yonhap)

Finance Minister Hong Nam-ki speaks at his end-of-year press conference on Dec. 30, 2019. (Yonhap)

South Korea's exports are set to fall for the 13th consecutive month in December. In the first 20 days of December, exports declined 2 percent mainly due to decreased shipments of semiconductors and ships.

As part of the government's initiative to boost the economy through investment, state-run institutions will expand next year's investment to 60 trillion won (US$51.9 billion), up from 55 trillion won this year.

Also, the government will encourage private firms to spend 25 trillion won in large-scale investment projects.

"If the government provides policy supports and entrepreneurs join (the economy's) positive trend, the economy must achieve a rebound next year," Hong said.

In a sign that the economic slowdown may have bottomed out, the nation's industrial output rose 0.4 percent from a year earlier in November, rebounding from a 0.4 percent decline in October, with both retail sales and facility investment growing.

The index of leading indicators grew 0.4 percent in November from a year earlier, compared with a 0.3 percent gain in October, according to the data.

The November rebound in three indices -- production, consumption and investment -- showed "positive figures that create expectations of momentum for an economic rebound," Hong said.

Earlier this month, the government unveiled new regulations to cool housing prices in Seoul, including tougher mortgage rules and higher taxes against high-priced homes.

Mortgage loans have been banned when buying a house worth over 1.5 billion won in "speculative" and "overheated speculative" areas since Dec. 17.

Home prices in Seoul are expected to stabilize on the tougher regulations, Hong said. But he warned that the government will draw up new measures if needed.

"With regard to the property market, additional measures will be drawn up at any time, if necessary," Hong said.

Housing prices have been on the rise in recent years, spurring policymakers to roll out a series of measures, including tightened home-backed loan regulations and hefty taxation, to cool down home prices.

But a supply shortage in Seoul and adjacent areas and low borrowing costs have continued to drive up demand for new apartments, while prodding builders to scramble to demolish aged apartments on hopes for hefty gains after rebuilding.


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