On the 18th, it was reported that a senior official at the Ministry of Planning and Budget recently met an old boy (OB) from the former Ministry of Planning and Budget. This OB was the person who handled the long-term fiscal outlook and funding needs while working on Vision 2030, a medium- to long-term national development strategy under the Roh Moo-hyun administration 20 years ago. The OB was said to have advised that the ministry at the time used its own analytical methodology to estimate long-term fiscal plans and effects, and was able to make the case for policy needs based on that.
In 2006, the Roh Moo-hyun administration presented Vision 2030. Vision 2030 was a long-term strategy that proposed welfare, employment, and fiscal tasks to address Korea's structural problems of economic stagnation caused by low birthrates, an aging population, and polarization. Many of today's systems, such as child benefits, the basic pension, and the earned income tax credit (EITC), were included.
Launched this year after being separated from the Ministry of Economy and Finance, the Ministry of Planning and Budget is preparing Vision 2045. It is a follow-up to Vision 2030. This is why a senior official at the Ministry of Planning and Budget sought out a former senior for advice.
To that end, the Ministry of Planning and Budget is moving to analyze economic indicators independently. It is known to be checking flash indicators such as consumption, employment, and industrial activity every month in the Fiscal Planning and Analysis Office. There is growing speculation that such independent analysis of economic indicators by the Ministry of Planning and Budget will expand during the process of drafting Vision 2045.
A government official said, "We cannot look only to the Finance Ministry's forecasts, which are relatively short term," adding, "The Ministry of Planning and Budget also needs a macro function (macroeconomic analysis) on a medium- to long-term basis."
Until now, macroeconomic analysis has been handled entirely by the Finance Ministry's Economic Policy Bureau. Because the Finance Ministry's main focus is short-term business cycle management and economic policy direction, the Ministry of Planning and Budget is expected to focus on long-term fiscal strategy and expenditure structure. If so, the two ministries could once again form a competitive dynamic over economic outlooks for the first time in 20 years.
The problem is that the Ministry of Planning and Budget and the Finance Ministry could present different forecasts. If key assumptions for budget drafting, such as growth and revenue projections, diverge, and the two ministries offer conflicting prescriptions based on different diagnoses, economic policy could become muddled.
There was a similar controversy in the past. Vision 2030 assumed average potential growth of ▲ 4.9% in 2006–2010 ▲ 4.3% in 2011–2020 ▲ 2.8% in 2021–2030.
At the time, the Ministry of Finance and Economy said, "It is unreasonable to project based on a growth rate approaching 5%." The Bank of Korea also said, "The potential growth rate has already fallen to the low 4% range." The media and experts also noted that the projections presented by Vision 2030 were overly optimistic.
In fact, over the past three years (2023–2025), Korea's economic growth rates—1.4%, 2%, and 1%—show a large gap from the rates presented by Vision 2030.