Prime Minister and Strategy & Finance Minister candidate Choi Kyung-hwan said, in the written answer for his confirmation hearing, that his economic team’s foremost goal is the recovery of domestic demand. Particularly, he put stress on the creation of decent jobs and a higher employment rate for the general public to be able to feel the recovery, while not denying the possibility of a revised supplementary budget.
He is expected to be in more aggressive pursuit of economic growth than his predecessor was. “The recovery of the Korean housing market is slower than in those of other countries and in the past, and we need to revitalize it by relaxing regulations such as the loan-to-value and debt-to-income ratios and the apartment price upper limit,” he said, adding, “Obligatory house rental registration, which is one of the party platforms of the opposition, is a kind of over-regulation, and the supply of more rental houses and the expansion of housing allowances appear to be more desirable ways to stabilize the rental market.”
He explained that deregulation in the metropolitan housing market, a hot-button issue as of late, has to be pursued based on social consensus. “Deregulation in the region should be in harmony with the value of balanced regional growth, meaning it requires social consensus, and we have to be in view of various factors such as support measures for the other regions and the pace of deregulation in the metropolitan area,” he continued.
The candidate also mentioned the possibility of a revised supplementary budget, though with some preconditions. “We are not mulling over such budget at the present moment, but will tap into it if the national economy is in a more severe slump,” he commented. Experts are predicting that the measure will be introduced after the announcement of economic indices for the first half of this year by the financial authorities, with the size of the budget at around 10 trillion won (US$9.8 billion), and after the government adjusts its economic growth rate forecast for 2014 slightly downward to 3.8 or 3.9 percent.
Controversy remains though. The forecast of slightly below 4.0 percent is still higher than the potential growth rate and a large number of insiders are concerned now over deteriorating fiscal sustainability. The financial management balance for this year is estimated at no less than 25.9 trillion won (US$25.6 billion) in the red.
“We will have to take more prudence when it comes to tax increases, because it has a sizable impact on investment and consumption,” he said, reiterating his stand against the issue. However, the candidate agreed with the welfare authorities regarding tobacco price increases, which is contrary to his earlier stance.