Hong Nam-ki "This Year's Economic Growth Forecast ↓, Inflation Rate ↑"

[Image source=Yonhap News]

[Asia Economy Reporter Myunghwan Lee] Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki predicted on the 12th that this year's economic growth forecast would be lowered from the previous estimate, while the inflation forecast would rise.

At a foreign press briefing held in Gwanghwamun, Seoul, Hong said, "The International Monetary Fund (IMF) is scheduled to release the World Economic Outlook (WEO) next week," adding, "I expect that growth forecasts will be lowered not only for the global economy but also for advanced countries, developing countries, and our country."

He continued, "Regarding inflation, the forecast will inevitably be much higher than now," and added, "The government's official forecast will likely be newly presented when the new administration announces the economic policy direction and economic policy stance for the second half of the year in mid-June."

Earlier, the government announced this year's economic policy direction, presenting an economic growth forecast of 3.1% and an inflation forecast of 2.2%. However, due to ongoing external shocks such as the global supply chain crisis and Russia's invasion of Ukraine, domestic consumer prices have surged, rendering these forecasts practically meaningless.

He also emphasized the necessity of introducing fiscal rules. He said, "We announced the plan to introduce Korean-style fiscal rules in October two years ago and submitted the bill, but there has been no progress in the National Assembly for a year and a half," adding, "I think the new government should accelerate this process." He pointed out, "Within the executive branch, there is already a stance to introduce fiscal rules and try to comply with them as much as possible, but I believe it should be institutionalized as soon as possible."

Regarding the possibility of drafting a supplementary budget worth 50 trillion won, he said, "I will not comment," adding, "There were talks that the government should make a decision now, but I thought it would be better for the new government to make a new judgment, so I decided to refrain from commenting."

On the foreign exchange market, he emphasized, "The won-dollar exchange rate has exceeded 1,230 won, which is a very high level compared to the exchange rate levels we have observed so far," and added, "The government is always prepared to take market stabilization measures if necessary."

Having become the longest-serving minister since the establishment of the Ministry of Economy and Finance, he spoke about his plans after retirement: "I have worked in the economic field for 37 years, and considering my age and experience, I think I need to find an area where I can contribute in the economic sector where I have spent my life." However, he firmly stated, "I have no intention of dabbling in politics."

Regarding the next Deputy Prime Minister candidate, Representative Choo Kyung-ho of the People Power Party, who has announced plans to shift the economic policy stance toward a business- and market-centered approach, Hong said, "I find it hard to agree with the evaluation that I pursued policies against the market by being too confrontational in the new government," adding, "It is only natural to respect market functions, create jobs in companies, and have companies lead growth." He further explained, "In the case of senior job projects, investment was deemed necessary considering the aging population and the COVID-19 situation."