Choo Kyung-ho: "Heating Costs Will Be Reflected Gradually... No Plans for Financial Support"

Keynote Speech at the 1st KEC Korea Top Executive Forum

[Asia Economy Reporter Suyeon Woo] Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho emphasized that improving the structural health of our economy through productivity enhancement is necessary to raise the potential growth rate. He explained that in the face of population decline due to low birth rates and aging, the only way to strengthen the economy's stamina is to increase productivity.

On the 16th, Minister Choo made this assertion in a keynote speech at the 'Korea CEO Forum' held at the Chosun Hotel in Sogong-dong, Seoul. Minister Choo stressed, "Our growth potential inevitably continues to decline because the population is decreasing," adding, "Structural problems must be resolved to strengthen the economy's stamina."

The working-age population aged 15 to 64 in Korea is decreasing by about 300,000 people annually. This means the number of people capable of productive activities is rapidly declining due to low birth rates and aging. Experts estimate Korea's productivity at about 60% of the United States and 70-80% of advanced European countries.

Minister Choo pointed out, "If two people used to do a job, now one person has to do it alone, so skills must improve, but we are still lacking in enhancing such productivity and (economic) stamina," adding, "It is not possible to suddenly increase the birth rate to raise the working-age population; there are structural problems." He cited excessive regulation, labor systems, and education issues as structural causes of this productivity decline.

Deputy Prime Minister for Economy Choo Kyung-ho is delivering the keynote speech at the '1st Korea Top CEO Forum' held on the 16th at the Chosun Hotel in Jung-gu, Seoul. Photo by Dongju Yoon doso7@

He also highlighted the seriousness of national debt, noting that as society ages, the number of taxpayers decreases while those who require tax spending increase exponentially. Minister Choo said, "Expanding fiscal policy is one of the easiest policies to consider," and added, "Saying 'let's spend money' is the same as saying 'let's incur debt.' We must not pass debt on to future generations."

Minister Choo emphasized that the private sector must fill the role of tightening fiscal policy to reduce national debt. He stated, "Semiconductors, Hallyu, and BTS were not created by the government but are products of our companies' creativity," and added, "The new government's economic policy is to move toward a market system centered on the private sector."

Regarding the recently controversial heating costs, he maintained the position that fees will be reflected gradually and long-term to reduce deficits in public enterprises. In particular, he drew a clear line by stating that raising heating fees and then supporting them again through fiscal policy will not be considered.

He mentioned that the economic growth trend this year will follow a 'lower in the first half, higher in the second half' pattern. Minister Choo said, "The first half will be difficult, especially the first quarter," and added, "To overcome the crisis, the government will support through various fiscal and monetary policies as well as institutional improvements."

Finally, Minister Choo emphasized, "If policies to improve structural health and enhance capabilities are not supported, even if the economic cycle turns, our economy may temporarily revive but will fail to maintain international competitiveness," stressing, "Policies to structurally increase productivity are necessary."