IMF recommends expansionary fiscal policy to support Korea's economic growth
- 5 years ago
A delegation from the International Monetary Fund has been holding its annual meetings with South Korean officials in Seoul over the past couple of weeks.
Those discussions came to an end on Tuesday with the IMF Korea Mission Chief announcing some key findings upon the conclusion of the talks.
Kim Hyesung reports.
An expansionary fiscal policy, accommodative monetary policy and labor market reform.
That's what the IMF Korea mission chief said Korea needs to help support its economic growth.
The IMF said Korea has strong fundamentals including skilled labor force, low public debt and ample foreign exchange reserves, but that the local economy faces headwinds like sluggish investment, slowing global trade and rising inequality.
"To support short-term growth and contain risks, the authorities should provide more fiscal stimulus through a supplementary budget."
The IMF Korea mission chief said the Moon Administration's expansionary fiscal policy is a move in the right direction.
The government's budget for 2019 increased by around nine percent on-year to 415 billion U.S. dollars.
But with exports, Korea's main driving force, set to slow down amid sluggish global trade...he recommended a supplementary budget of zero-point-five percent of its nominal GDP, or around 8 billion dollars this year to support growth.
Korea's unemployment rate hit 4-point-four percent in January, making it the highest figure in nine years.
To actually help promote long-term, inclusive growth and create jobs, the IMF said on top of low interest rates, labor market reform is key.
"Flexicurity should be adopted as a basis for labor market policies by making employment protection legislation more flexible, while further enhancing social safety nets..."
The IMF said 'flexicurity' or the combination of flexibility and security in dealing with job market and unemployment benefits is important to raise productivity and employment.
As for economic projection, the IMF said its outlook of Korea's economic growth stands at around 2-point-six percent...in line with Korea's finance ministry's growth projection.
Kim Hyesung, Arirang News.
Those discussions came to an end on Tuesday with the IMF Korea Mission Chief announcing some key findings upon the conclusion of the talks.
Kim Hyesung reports.
An expansionary fiscal policy, accommodative monetary policy and labor market reform.
That's what the IMF Korea mission chief said Korea needs to help support its economic growth.
The IMF said Korea has strong fundamentals including skilled labor force, low public debt and ample foreign exchange reserves, but that the local economy faces headwinds like sluggish investment, slowing global trade and rising inequality.
"To support short-term growth and contain risks, the authorities should provide more fiscal stimulus through a supplementary budget."
The IMF Korea mission chief said the Moon Administration's expansionary fiscal policy is a move in the right direction.
The government's budget for 2019 increased by around nine percent on-year to 415 billion U.S. dollars.
But with exports, Korea's main driving force, set to slow down amid sluggish global trade...he recommended a supplementary budget of zero-point-five percent of its nominal GDP, or around 8 billion dollars this year to support growth.
Korea's unemployment rate hit 4-point-four percent in January, making it the highest figure in nine years.
To actually help promote long-term, inclusive growth and create jobs, the IMF said on top of low interest rates, labor market reform is key.
"Flexicurity should be adopted as a basis for labor market policies by making employment protection legislation more flexible, while further enhancing social safety nets..."
The IMF said 'flexicurity' or the combination of flexibility and security in dealing with job market and unemployment benefits is important to raise productivity and employment.
As for economic projection, the IMF said its outlook of Korea's economic growth stands at around 2-point-six percent...in line with Korea's finance ministry's growth projection.
Kim Hyesung, Arirang News.