[News Focus] National debt-to-GDP likely to top 40% for 1st time in 2021

SEJONG -- South Korea’s national debt has reached the highest level after rising back past 800 trillion won ($717 billion), aggravating concerns over fiscal soundness. According to calculations from the National Assembly Budget Office, the nation’s sovereign debt was estimated at 800.3 trillion won as of Saturday. Though the figure inched down below the 800 trillion-won mark in early 2021 after surpassing 800 trillion won for the first time in November 2020, it has broken through t

May 30, 2021

S. Korea to decide on another extra budget after gauging tax revenue, public financing need

South Korea plans to take into account tax revenue situations and demand for increasing public finances before it decides on whether to draw up another extra budget in the latter half of 2021, a senior government official said Friday. First Vice Finance Minister Lee Eog-weon also said the government will focus its economic policy on underpinning an accelerating economic recovery in the second half. Talk of another extra budget emerged from the ruling party after President Moon Jae-in said Thur

May 28, 2021

Architect of Moon’s income-led growth scheme to lead KDI

The Korea Development Institute, a state-funded think tank, has appointed the architect behind President Moon Jae-in’s income-led growth policy as its new head. Hong Jang-pyo was the chief secretary for economic affairs and led the presidential committee on income-led growth in 2018. He was said to have orchestrated policy drafts that were later blamed by Moon’s critics for failing to narrow economic disparities to which they were intended for. Hong’s three-year term will st

May 28, 2021

Banks' lending rates inch down in April

South Korean banks' lending rates edged down in April amid a slight decline in deposit rates, central bank data showed Friday. The average interest rate charged on new bank loans came to 2.74 percent in April, down 0.03 percentage point from the previous month, according to preliminary data from the Bank of Korea (BOK). The BOK cut the key interest rate to a record low of 0.5 percent in May last year after delivering an emergency rate cut of half a percentage point in March to cushion the impa

May 28, 2021

S. Korea to extend consumption tax cut on passenger cars by another 6 months

South Korea plans to extend a cut in the consumption tax on passenger cars by another six months in a bid to boost domestic demand hit by the pandemic, the finance minister said Friday. A 30 percent cut in the consumption tax on the purchase of passenger cars is supposed to expire at the end of June, but the country will extend it until the end of this year, according to Finance Minister Hong Nam-ki. In July 2018, the government slashed the auto consumption tax to 3.5 percent from 5 percent an

May 28, 2021

Central bank hints at rate hike, raises growth forecast to 4%

South Korea’s central bank on Thursday took a more hawkish stance toward an interest rate hike by the end of the year, while upgrading its economic outlook for this year to 4 percent. In a briefing tied to a monetary policy meeting held earlier in the day, Bank of Korea Gov. Lee Ju-yeol hinted that the policy board has discussed the possibility of a policy shift. “If the economic situation improves, then there is a need to adjust the measures in line with the situation,” Lee

May 27, 2021

Korean food exports soar to record high amid pandemic

South Korea’s food exports advanced 14.6 percent on-year in 2020, despite an overall export slump on the back of the lingering pandemic, customs data showed Thursday. Overseas shipments reached an all-time high of $4.28 billion last year, compared with $3.73 billion posted in 2019, according to the Korea Customs Service. Livestock and fishery products were not counted in the figures, and neither were alcohol or other beverages. The upward trend continued so far this year, amounting to $1

May 27, 2021

Central bank says leveraged crypto trading threatens banking system

Leveraged cryptocurrency trading by individuals in South Korea threatens the nation’s financial system, Bank of Korea Gov. Lee Ju-yeol said Thursday. Given the price volatility of virtual assets, increased trading in such assets leaves Korea’s financial system subject to instability, Lee said in a press conference after a monetary policy committee meeting. “An excessive level of leveraged cryptocurrency trading puts households at risk of financial damages considering the in

May 27, 2021

Authorities to discuss green finance during P4G Seoul Summit

South Korea’s top financial regulator said Thursday it will host a special session ahead of the upcoming P4G Seoul Summit to discuss the finance industry’s role in the global fight against climate change. The event will be held virtually on Saturday at 8 p.m. under the theme of “Role of Finance in Post COVID-19 Green Recovery,” convened by Financial Services Commission Chairman Eun Sung-soo, Environment Minister Han Jeoung-ae, Korea Development Bank Chairman Lee Dong-gul

May 27, 2021

Retail sales up 13.7% in April amid extended pandemic

Retail sales in South Korea shot up 13.7 percent on-year in April on the back of an economic recovery amid the prolonged COVID-19 pandemic, data showed Thursday. The combined sales of 25 major offline and online retailers reached 12.3 trillion won (US$11 billion) last month, up from 10.8 trillion won a year earlier, according to the data compiled by the Ministry of Trade, Industry and Energy. Sales from offline stores jumped 11.2 percent over the cited period as consumers, less wary of the pan

May 27, 2021

BOK sharply ups 2021 growth outlook to 4% as recovery gathers pace

South Korea's central bank on Thursday sharply raised its 2021 growth outlook to 4 percent, while holding its benchmark policy rate unchanged at a record low of 0.5 percent, amid a strong rebound in exports. Buoyed by signs of a robust recovery in exports, the Bank of Korea (BOK) raised its growth outlook to 4 percent for this year, and to 3 percent for next year. The BOK's February forecast was that South Korea's economy would grow 3 percent this year. BOK Gov. Lee Ju-yeol said the pace of e

May 27, 2021

Exports forecast to rise 47.5% in May on global economic recovery: poll

South Korea's exports are expected to rise a whopping 47.5 percent on-year in May on the back of the global economic recovery, which led to higher demand for chips and automobiles, a poll showed Thursday. Outbound shipments are estimated at US$51.3 billion this month, according to the poll by Yonhap Infomax, the financial news arm of Yonhap News Agency. The survey was conducted on eight brokerage houses. Imports are estimated to rise 39.8 percent over the period to $48.4 billion, resulting in

May 27, 2021

Korea to build mega biomedical database by 2028

The government will spend some 1 trillion won ($894.8 million) on building a mega database to collect medical information of 1 million people in a bid to foster the biohealth industry as a new growth engine, officials said Wednesday. “In response to the rapidly changing biotechnology industry environment, we will provide all-round support, such as R&D intensive investment in core technologies, including new drugs and innovative medical devices; commercialization support; expansion of

May 26, 2021

NTS chief seeks mutual taxation agreement with Indonesia

The chief of the National Tax Service of South Korea has approached Indonesia in hopes of revitalizing the mutual agreement procedure and advance pricing arrangement between the two countries to prevent double taxation and ease uncertainties for trading firms, according to the tax agency Wednesday. NTS Commissioner Kim Dae-ji visited Jakarta on Tuesday to meet with Indonesia’s tax authority, Commissioner Suryo Utomo. During the meeting, they discussed ways to maintain close interaction an

May 26, 2021

S. Korea vows financial support to boost overseas green projects

The South Korean government said Wednesday it will expand financial support for domestic companies in green sectors to make inroads into the global market, in partnership with the Green Climate Fund. Launched in late 2010, the South Korea-based United Nations climate fund aims to channel money from industrialized nations to developing countries to help them tackle climate change-related problems. Finance Minister Hong Nam-ki and Yannick Glemarec, executive director of the GCF, agreed to inc

May 26, 2021

Economists see BOK raise 2021 growth forecast to some 4%

The Bank of Korea (BOK) may raise its 2021 growth forecast to some 4 percent this week as exports showed signs of a strong recovery amid an aggressive fiscal stimulus, economists said Wednesday. The BOK is widely expected to freeze its key rate at a record low of 0.5 percent at Thursday's monetary policy meeting, but market observers will closely monitor the central bank's revised growth outlook. The BOK's February forecast was that South Korea's economy would grow 3 percent this year. So

May 26, 2021

Large firms' workforce drops 0.8% in 2020 amid pandemic

Large companies in South Korea cut their workforce nearly 1 percent in 2020 from a year earlier in the wake of the coronavirus pandemic, a corporate tracker said Wednesday. According to CEO Score, 309 out of the country's top 500 corporations had a combined headcount of 1,203,835 as of the end of March, down 0.8 percent or 9,756 from end-December 2019. The number of their regular workers declined 1 percent to around 1.13 million over the cited period, with that of irregular employees edging up

May 26, 2021

Manufacturers' biz sentiment worsens for June

South Korean manufacturers' business sentiment fell for June, marking the first on-month decline since January, as chip shortages cost automakers, central bank data showed Wednesday. The business sentiment index (BSI) for local manufacturers came to 97 for June down from 98 for May, according to the data from the Bank of Korea (BOK). The index measures manufacturers' outlook on business conditions in the following month. A reading below 100 means pessimists outnumber optimists. Hyundai Motor

May 26, 2021

Household credit growth slows in Q1

South Korea's household credit grew at a slower pace in the first quarter, as banks tightened rules on loans, central bank data showed Tuesday. Household credit reached a record high of 1,765 trillion won ($1.56 trillion) as of March, up 37.6 trillion won from three months earlier, according to the data from the Bank of Korea (BOK). Household credit refers to credit purchases and loans for households that have been extended by financial institutions, including commercial lenders and mutual sav

May 25, 2021

Larger firms' exports dip 7.3% last year amid pandemic

Exports of South Korean bigger companies declined 7.3 percent last year from a year earlier amid the pandemic, led by a fall in shipments of petrochemicals, data showed Tuesday. Overseas shipments by the country's conglomerates were valued at $322.5 billion last year, compared with $347.7 billion the previous year, according to Statistics Korea and the Korea Customs Service. The decline was led by the manufacturing sector, the backbone of the country's economy, the data showed. Exports of larg

May 25, 2021