Policies Focus on Fiscal Spending

The South Korean government announced its economic policies for the second half of this year on June 1 and economists pointed out that the policies lack fundamental elements to revive the private economic sector.

“The policies focus on fiscal spending rather than deregulation and the government is planning to maintain employment by spending more rather than dealing with fundamental problems such as working hours,” said Dankook University professor Kim Tae-ki, adding, “When it comes to the supplementary budget bill to be submitted to the National Assembly on June 4, the IMF already warned that the South Korean government’s fiscal expansion is too fast and any other supplementary budget may lead to the so-called Korea discount.”
 

“It appears that the government is concentrating on maintaining the status quo and managing indices rather than overcoming the ongoing crisis and seeking new opportunities by restructuring,” Yonsei University professor Yang Joon-mo remarked, continuing, “The government’s measures for more reshoring and high-tech R&D center attraction cannot be effective unless the side and negative effects of its income-led growth policy are addressed.”

The economic policies include groundwork for universal employment insurance. Experts point out that the insurance is likely to cause significant problems down the road with the government’s employment insurance fund about to be exhausted.

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