Choo Kyung-ho "Downside risks to the economy will increase... Inflation to peak in October and then decline"

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is presiding over the Emergency Economic Ministers' Meeting held at the Government Seoul Office on the 8th. [Image source=Yonhap News]

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho recently assessed the domestic economic situation, stating that concerns about a recession are growing due to the slowdown in growth in major countries such as the United States and China, and that downside risks to the economy are expected to gradually increase in the second half of the year. Regarding inflation, he predicted that it will peak by October at the latest and then slowly enter a downward trend.

On the 11th, Deputy Prime Minister Choo met with reporters at the Government Complex Sejong and said, "Recently, the global economy has shown some positive signs such as a slowdown in inflation in the United States, but difficulties still persist. In response to high inflation, Europe and other regions are accelerating monetary tightening following the United States, which is expanding uncertainties in asset markets and the economy."

He continued, "Concerns about economic contraction are gradually increasing due to the sluggish growth in the second quarter in the United States and China, as well as the International Monetary Fund's (IMF) downward revision of the global growth forecast, and our economy is also being significantly affected. Inflation in July remained at a high level, recording the low 6% range for the second consecutive month following June," he emphasized.

Deputy Prime Minister Choo stated, "Due to the impact of interest rate hikes in major countries, downside risks to the economy are expected to gradually increase as we move into the second half of the year. Overall, economic policy will continue to prioritize price stability and livelihood stabilization for the time being, while paying close attention to risk management and the possibility of a global economic slowdown."

However, Deputy Prime Minister Choo noted some positive signs such as the slowdown in U.S. inflation and the decline in international oil prices, and predicted that the inflation trend will peak around September to October and then stabilize.

Regarding the forecast that this year's inflation rate will exceed 5%, he said, "Unless unexpected variables arise, the upward trend will gradually slow down after Chuseok, peaking in September or at the latest October, and then enter a downward trend. However, we need to further examine how recent heavy rains might affect crop yields."

Regarding the nationwide indicator survey (NBS) conducted from the 8th over three days targeting 1,008 adult men and women by Embrain Public, K-stat Research, Korea Research, and Hankook Research, which showed 61% negative opinions on the Yoon Suk-yeol administration's economic policies, he said, "As the person leading the economic team, I will humbly and seriously accept the evaluation results."

Deputy Prime Minister Choo explained, "Since the launch of the new government, we have introduced numerous measures including various livelihood stabilization policies, economic policy directions to revive economic vitality, and the preparation of supplementary budgets. While their effects will gradually appear over time, inflation instability and economic difficulties still persist, which I believe is reflected in such evaluation indicators."

He added, "We will work harder to quickly stabilize livelihood prices and strengthen the structure of our economy by steadily implementing structural reforms."