The Korea Herald


Korea to grow in low 3% range this year: Choi

By 황장진

Published : June 6, 2015 - 06:10

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South Korea's top economic policymaker said Friday that the country's economy will likely grow just over 3 percent this year due to some trouble in exports.

At a meeting attended by more than 60 investors in London, Finance Minister Choi Kyung-hwan said the slower than anticipated growth is due to a drop in global trade that has offset steady gains in domestic consumption.

The government had originally targeted 3.8 percent growth as being attainable this year, up from 3.3 percent reached in 2014.

The minister stressed, however, the government is making aggressive efforts to keep the economy on the recovery track.

"I expect the economy to continue growth trends in the mid- and long term," he said.

He added the government will review whether to maintain the current monetary policy or seek more expansionary measures next month when it decides the direction of overall economic policy in the second half of 2015.

Thanks to the country's fiscal health, Choi said, Seoul enjoys considerable leeway in terms of fiscal measures that can be taken if the need arises.

The official, who doubles as deputy prime minister in charge of economic affairs, said South Korea is prepared for any short term problems that may arise.

"Not only are we prepared, but we are moving to strengthen the country's growth potential," he said.

Choi pointed out that Asia's fourth largest economy has consistently used crisis situations in the past to prop up its economic fundamentals.

He elaborated that Seoul is committed to pushing forward fundamental reforms in labor, finance, the public sector and education, that had been cited for holding back growth in the past, and is firmly on a course to building up the country's service industry to create a "virtuous cycle" for sustainable growth.

"If such reforms measures are carried out, the country will be able to pull off the fastest growth among Organization for Economic Cooperation and Development members," he predicted.

The minister said South Korea has inked numerous free trade agreements that can expand the country's economic horizons and has been diligent in managing risks associated with rapid aging of the population and eventual reunification with North Korea.

The official said that efforts have been made to encourage greater dividend payments to investors by companies. He said such measures can address issues like South Korean stocks being undervalued, and make the market more attractive to foreign investors, particularly when global interest rates are low.

On foreign exchange, Choi said that the Korean won has been affected less by the strong U.S. dollar compared to other currencies.

The policymaker also said that measures to make South Korea a leading transaction hub for the Chinese yuan have got off to a good start, and outlined plans to issue yuan-based foreign exchange stabilization bonds in the second half of this year.

On Thursday, meanwhile, he told South Korean correspondents that the outbreak of the Middle East Respiratory Syndrome in South Korea is not having a serious impact on the economy just yet.

Choi is in London for an investor relations session after attending a similar event in New York eight months ago. (Yonhap)