[Weekly Outlook] Government Fiscal Trends Announcement... August Import Prices Also in Focus

Government to Announce 'September Fiscal Trends' on the 15th
National Budget Deficit Exceeds 100 Trillion Won from January to June This Year

Economic and Financial Authorities Gathered in One Place
(Seoul=Yonhap News) Reporter Shin Junhee = On the morning of the 5th of this month, Chu Kyung-ho, Deputy Prime Minister for Economy and Minister of Strategy and Finance (from left), Choi Sang-mok, Senior Secretary for Economic Affairs to the President, Lee Chang-yong, Governor of the Bank of Korea, Kim Ju-hyun, Chairman of the Financial Services Commission, and Lee Bok-hyun, Governor of the Financial Supervisory Service, are entering the emergency macroeconomic financial meeting held at the Bankers' Hall in Jung-gu. 2022.9.5
hama@yna.co.kr
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[Asia Economy Sejong=Reporter Lee Jun-hyung] The government will announce the September fiscal trends, which provide an overview of the national budget, on the 15th. Next week (12th-16th), the August import and export price indices will also be released, drawing attention to whether import prices have declined.

According to related ministries on the 11th, the Ministry of Economy and Finance will release the "Monthly Fiscal Trends September Issue" on the 15th of this month. The fiscal trends report provides data to review the government's total expenditures, total revenues, and national debt. The September fiscal trends cover the period from January to July of this year.

The national budget deficit has already exceeded 100 trillion won. According to the "Monthly Fiscal Trends August Issue" published by the Ministry of Economy and Finance last month, the managed fiscal balance deficit from January to June this year was approximately 101.9 trillion won. The managed fiscal balance is the figure obtained by subtracting the four major social security funds, including the National Pension, from the integrated balance (total revenue minus total expenditure), showing the government's actual fiscal condition. The integrated fiscal balance deficit from January to June this year was 75 trillion won.

Government Pushes for Legalization of Fiscal Rules

In response, the government is strengthening its sound fiscal policy stance. Through the 2023 budget plan deliberated and approved at the Cabinet meeting at the end of last month, the government announced it would carry out a 24 trillion won scale expenditure restructuring. The integrated balance and managed fiscal balance deficits for next year are projected to be 13.1 trillion won and 58.2 trillion won, respectively.

Institutional measures to prevent an increase in national debt are also being prepared. The government plans to legalize fiscal rules that manage the managed fiscal balance deficit relative to Gross Domestic Product (GDP) within -3%. The government intends to first improve the managed fiscal balance deficit relative to GDP from -4.4% this year to -2.6% next year, a 1.8 percentage point improvement.

Busy Container Unloading Operations at Busan Port
(Busan=Yonhap News) Reporter Kang Deok-cheol = In July, the trade balance turned to a deficit for the first time in 10 years and 3 months due to rising import prices of raw materials and other goods. The current account recorded a surplus for three consecutive months, but the surplus amount decreased. According to the preliminary balance of payments statistics released by the Bank of Korea on the 7th, the current account surplus in July was $1.09 billion (approximately 1.5037 trillion KRW). The photo shows container unloading operations taking place at the Sinsundae Pier of Busan Port on the morning of the 7th. 2022.9.7
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Attention on Whether Import Prices Decline

Next week, the import price index for last month will also be announced. The Bank of Korea plans to release the import and export price index statistics for last month on the 16th of this month. Previously, the import price index recorded 153.49 in July, marking a decline for the first time in three months. Attention is focused on whether the import price index will continue its downward trend last month following July this year.

The Bank of Korea will also disclose the minutes of the Monetary Policy Committee meeting on the 13th. These minutes are from the meeting on the 25th of last month when the committee decided to raise the base interest rate by 0.25 percentage points. At that time, the Monetary Policy Committee decided on four consecutive base rate hikes for the first time in history. Through the minutes to be released on the 13th, the background of the base rate hike decision can be confirmed, and the future direction of monetary policy can be gauged.

The Statistics Korea will announce last month's employment trends on the 16th of this month. Attention is on how the global economic slowdown has affected the domestic employment market. Although the number of employed persons in July increased by more than 800,000 compared to a year ago, the rate of increase has declined for two consecutive months.