Economic and financial chiefs met and said, "As revenues are expected to increase going forward, the expanded fiscal capacity should be used for future-oriented investments to boost the potential growth rate."
Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, held an "expanded macro fiscal-financial meeting" at Government Complex Seoul on the 10th and discussed these issues. Attending were Park Hong-geun, Minister of the Ministry of Planning and Budget, Lee Eog-weon, chair of the Financial Services Commission, and Shin Hyun-song, governor of the Bank of Korea.
Recently, warnings about Korea's potential growth rate have been mounting. The Organisation for Economic Co-operation and Development (OECD) released an outlook that Korea's potential growth rate could fall below 1.5% for the first time ever next year. Although the semiconductor upturn is pushing real gross domestic product (GDP) growth sharply higher, the view is that structural constraints in the Korean economy, such as labor and capital, will persist.
They said, "An active fiscal role is needed to ease polarization and to alleviate the burden on people's livelihoods from rising prices," adding, "For efficient fiscal management, efforts on fiscal structure reform and expenditure restructuring are necessary."
They also said, "As volatility in financial conditions increases, the burden on vulnerable institutional sectors could grow," adding, "We will work closely to manage risks for low-income and low-credit borrowers whose repayment burdens rise when interest rates increase; small self-employed people and microbusiness owners; small and midsize importers and processing firms exposed to a stronger exchange rate; and leverage-investment risks stemming from higher stock-market volatility."