Gu Yun-cheol, Deputy Minister of Economy and Finance, "Concerns Over 1Q Growth Rate Adjustment Due to COVID-19"

"Ensure Flawless Achievement of 60 Trillion Investment in Public Institutions"

Koo Yoon-chul, 2nd Vice Minister of Strategy and Finance

[Asia Economy Reporter Kwangho Lee] Koo Yoon-cheol, Vice Minister of Strategy and Finance, said on the 14th, "There is a concern that adjustments may occur in the growth rate for the first quarter of this year due to the novel coronavirus disease (COVID-19) outbreak."

On the same day, Vice Minister Koo held the '1st Public Institution Investment Execution Inspection Meeting' for 2020 at the Korea Trade Insurance Corporation and stated, "Our economy has shown signs of improvement in production, consumption, investment, and economic sentiment since the beginning of the year, but the recent COVID-19 outbreak is increasingly likely to act as a downside risk to the economy."

The domestic gross domestic product (GDP) growth rate announced by the Bank of Korea is calculated by comparing it with the previous quarter. Last year, the GDP growth rate contracted by -0.4% in the first quarter, rebounded to 1.0% in the second quarter, but then fell again to 0.4% in the third quarter. However, the government increased its contribution through fiscal execution, leading to a partial recovery to 1.2% in the fourth quarter.

Vice Minister Koo emphasized, "There may be a base effect due to growth of over 1% in the fourth quarter of last year," adding, "To respond proactively and with vigilance to the impact this situation may have on the economy, active investment execution by public institutions as well as government fiscal measures is essential."

This year, major public institutions plan to promote investments totaling 60 trillion won, an increase of 5.9 trillion won from last year's execution performance of 54.1 trillion won, to create jobs and expand growth engines.

They intend to focus investments on social overhead capital (SOC) sectors such as new town construction in Sejong and Wirye, public housing supply, railway construction (including the Seohae Line), and highway construction (Seoul-Sejong, etc.), as well as energy sectors including transmission and distribution facilities for stable power supply, power plant construction, and facility reinforcement.

Vice Minister Koo urged, "Please make every effort to achieve the annual investment of 60 trillion won without any setbacks," and requested, "Expand the execution scale as much as possible through various efforts such as 'pull-forward investment' (investments made ahead of schedule) in the first quarter and the first half of this year."

The government evaluated that public institutions achieved a very high execution rate of 98.4% compared to the annual plan of 55 trillion won last year.

Vice Minister Koo expressed, "We plan to hold the Public Institution Investment Execution Inspection Meeting once a month to check and actively find solutions for difficulties in investment execution by each institution."

He also added, "We will prepare guidelines for prior review of equity participation to ensure swift pre-consultation between institutions and related ministries," and "We will shorten the public institution preliminary feasibility study period, which currently takes more than 10 months, to a maximum of 7 months to support timely investment by public institutions."