Deputy Prime Minister Nominee Estimated This Year’s Economic Growth Rate at 3.1%

Deputy Prime Minister and Minister of Strategy & Finance nominee Yoo Il-ho said at his confirmation hearing on January 11 that the Korean government will be able to attain its economic growth target of 3.1% for this year even without any supplementary budget.

Earlier, the Ministry of Strategy & Finance mentioned that the Korean economy is likely to grow by 3.1% this year based on the low international oil prices, continuation of macroeconomic policy effects and promotion of consumption. It also estimated the nominal growth rate reflecting consumer prices at 4.5%, adding that the current situation differs from that during the IMF bailout in the late 1990s although the current economic situations are far from favorable.

In the meantime, the nominee showed a negative view as to tax increase. “An increase in corporate tax rate, which is called for by the opposition, requires a very prudent approach in view of the possibility of investment and employment shrinkage and tax competition between countries,” he said. According to the OECD, Korea’s corporate tax-to-GDP ratio was 3.4% in 2013, the sixth-highest in the OECD. Germany recorded 1.8% that year while the United States, Britain and Canada posted 2.3%, 2.5% and 2.7%, respectively.

He also explained that any decision on interest rates is up to the Monetary Policy Committee. “Still, I believe that the committee should continue sharing its opinions on macroeconomic conditions and directions with the others with its discretion ensured,” he mentioned, implying the necessity of a regular communication channel with the Bank of Korea. The nominee added that Korea’s government debt would have to be decreased in the long term from approximately 40% of the GDP.