The Korea Development Institute (KDI), a state-run research body, said a supplementary budget is not necessary given current economic conditions. Earlier, President Lee Jae-myung raised the possibility of a supplementary budget six times early this year, beginning with his remark at a Cheong Wa Dae senior secretaries' meeting last month that "we should keep the foundation of culture and the arts healthy, even if it takes a supplementary budget."

On the 11th, Jeong Kyuchul, head of economic outlook at KDI, presents the KDI February revised economic outlook at the Ministry of Economy and Finance in the Government Complex Sejong in Sejong City. /Courtesy of News1

Jeong Gyu-cheol, head of KDI's Economic Outlook Office, said at a "revised economic outlook" briefing on the 11th, "KDI believes Korea is on a path of economic improvement," adding, "We expect growth (1.9%) to outpace the potential growth rate (estimated by KDI at 1.6%)."

Deputy Minister Jeong said, "If the economy proceeds as KDI expects, I don't think a supplementary budget to stimulate the economy is particularly necessary," adding, "However, my understanding is that the current talk of an extra budget is more about strengthening support for specific sectors than about stimulus."

Regarding the benchmark interest rate, now around 2.5% per year, he said, "It doesn't seem there is much need to restrain the economy through rates, nor to prop it up." He added, "It appears we have reached roughly the neutral rate, estimated in the mid-2% range," and "Absent any special developments, I don't think there will be many reasons to change rates significantly."

Meanwhile, KDI set this year's growth forecast for Korea at 1.9%. That is an upward revision of 0.1 percentage point (p) from the projection three months ago (1.8%).

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