Hong Nam-ki: "South Korea's Economic Contraction Smaller Than Advanced Countries... Domestic Demand Slump Is Painful"

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the 'Innovation Growth BIG3 Promotion Meeting' held at the Government Seoul Office in Jongno-gu, Seoul on the 21st. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kwon Haeyoung] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated that despite the spread of the novel coronavirus infection (COVID-19), "our economy has once again proven to be resilient in times of crisis." He identified the sluggish domestic demand due to the third wave of COVID-19 as the most urgent issue.

On the morning of the 26th, Hong posted on his social media (SNS), "the 4th quarter gross domestic product (GDP) grew by 1.1% quarter-on-quarter, surpassing the forecasts of major domestic and international institutions and market expectations, and recorded -1% for the entire last year," adding, "Although there was positive growth for two consecutive quarters in the second half, I deeply regret that if COVID-19 had been contained and normal economic activities had been possible, we might have avoided negative growth."

The Bank of Korea announced that the growth rate was 1.1% in the 4th quarter of last year and -1% for the year.

Nevertheless, "compared to advanced economies ranked within the top 10 in economic size, which are expected to experience negative growth ranging from -3% to more than -10% annually, our contraction was much smaller," he evaluated, emphasizing that the foundation for a rapid and strong economic recovery was strengthened.

He particularly mentioned that the export sector performed well. Hong explained, "In the case of exports, the accumulated 'manufacturing competitiveness' has been a significant foundation," adding, "The recovery in exports not only led to a rebound in growth but also boosted expectations for the spread of economic recovery momentum as it translated into increased corporate facility investment."

However, he pointed out the prolonged domestic demand slump as "the most painful part" and an issue that must be urgently resolved.

He said, "'For a rapid and strong economic recovery, the normalization of the domestic economy is absolutely necessary,' and although the third wave of infections seems to be easing recently, the most urgent task is to thoroughly implement quarantine measures to quickly contain the spread of COVID-19 and enable normal economic activities and everyday life," he stressed.

Finally, Hong mentioned that the government also faithfully played a supporting role during the crisis through fiscal measures.

Hong stated, "The government swiftly implemented bold support measures amounting to 310 trillion won, including four supplementary budgets in one year for the first time in 59 years," adding, "As a result, fiscal policy significantly contributed to last year's growth and helped cushion the negative growth." He continued, "We were able to achieve better results compared to major advanced countries," emphasizing, "Now, the important thing is to have confidence in our economy and unite our final efforts to achieve a 'rapid and strong economic recovery and rebound' by sprinting forward once again."