The government plans to spend 3 trillion won ($2.67 billion) more in the first half to stimulate the slow pace of economic recovery and increase public investment by around 7 trillion won within the year, South Korea’s finance minister said Friday.
Choi Kyung-hwan said at the meeting of economy-related ministers held in Seoul that the new measures are needed due to weak consumption and an unsteady rise in corporate investment, brought on by weak demand.
Facility investment by companies contracted 7.1 percent in January compared with the previous month, with import of machinery down 1.2 percent on-year. Both numbers are a sign that business investments, which have been on the rise since September, are being scaled back, Retail sales were in negative territory by 3.1 percent in the first month of this year, with exports backtracking in January and February compared with the year before.
“The economy is showing signs of gradual improvement, but gains are not solid so action must be taken,” he stressed.
The policymaker said 59 percent of the budget will be spent before the end of June, up from the previously targeted 58 percent. This translates into the government injecting 2 trillion won more into the economy.
In addition, another 1 trillion won will be acquired from the 46 trillion won economic stimulus package created last October.
Initially, the government wanted to spe