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(2nd LD) S. Korea to attract private funds worth 30 tln won for infrastructure projects

All News 11:10 July 23, 2020

(ATTN: ADDS finance ministry's statement in paras 13-16)

SEJONG, July 23 (Yonhap) -- South Korea plans to attract private funds worth some 30 trillion won (US$25.1 billion) for infrastructure projects, Finance Minister Hong Nam-ki said Thursday, as the government seeks to spur an economic recovery after the coronavirus pandemic.

The projects include 4.5 trillion won worth of expressways and 2.3 trillion won for sewage systems, Hong told a meeting with economy-related ministers.

To attract private funds, the government will ease tax rules and regulations on privately-held funds, Hong said.

By 2025, the government will also build 1,000 plants for fifth-generation telecommunications and artificial intelligence, Hong said.

South Korea's economy contracted 3.3 percent on quarter in the second-quarter of this year, marking the sharpest contraction since the first quarter of 1998, when it contracted 6.8 percent.

As the pandemic pushed the nation's economy into a technical recession, Hong said the second-quarter contraction was "deeper than expectations due to external shocks."

South Korea's exports plummeted 16.6 percent in the second quarter, marking the worst figure since the fourth quarter of 1963.

The nation has pledged to spend 277 trillion won, or 14.4 percent of its gross domestic product, to help cushion the economic fallout from the pandemic.

Hong said the nation's economy could rebound in the third quarter, thanks to a recovery in consumption and fiscal spending.

Finance Minister Hong Nam-ki speaks at a meeting with economy-related ministers in Seoul on July 23, 2020. (Yonhap)

"It is possible for the economy to rebound in the third quarter if the current trend continues," Hong said.

To boost consumption and local tourism, the government designated Aug. 17 as a temporary holiday.

The government will draw up a package of measures to promote local tourism in August, Hong said.

In a statement, the ministry said the pandemic-led economic recession is "worse" than that triggered by the 2008 global financial crisis.

The contribution of exports, the nation's biggest growth engine, to the economy dropped by 4.1 percentage points in the second quarter, while consumption added 0.7 percentage point to the economy, the ministry said.

The ministry said a "China-like rebound" is possible in the third quarter.

The Chinese economy contracted 6.8 percent in the first quarter before expanding 3.2 percent in the second quarter.

The Organization for Economic Cooperation and Development (OECD) has predicted that South Korea's economy could shrink 1.2 percent this year as the global economy is expected to have its worst year since the Great Depression of the 1930s due to the pandemic.

The world economy is expected to contract 6 percent this year, the OECD said.

kdh@yna.co.kr
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