The Ministry of Strategy and Finance has revised down its growth estimate this year on fears that the global economy could continue to be weighed down by sluggish demand.

The ministry on Thursday projected 2.3 percent growth in 2013, down from its initial forecast of 3 percent announced last year, as exports slowed and private consumption and facilities investment continued to show weak performance.

Unveiling the new government’s economic policy direction, Finance Minister Hyun Oh-seok said it would devise the supplementary budget sometime in April to boost the sagging economy.

“The Korean economy has maintained unprecedentedly low growth for almost two years, and things look tough for the future,” Hyun said.

He added that the government would aim to implement a variety of effective policies to revive the economy.

However, the ministry said the global slowdown would lead Korea’s tax revenue to shrink by more than 6 trillion won.

It also predicted 250,000 jobs would be created this year, down from its projection of 320,000. Some 440,000 jobs were created in 2012, when Korea achieved GDP growth of 2 percent.

The Finance Ministry’s 2013 growth forecast is lower than the Bank of Korea’s 2.8 percent and the Korea Development Institute’s 3 percent.

The ministry said that it would spend 60 percent of the country’s budget of 173.6 trillion won ($155.9 billion) to stimulate the economy for job creation, mid-income families, and small and medium enterprises in the first half of this year.

It spent about 18 percent of the budget as of last month, more than the 17 percent initially planned by the government.

Market analysts said that the ministry was likely to secure additional funds of more than 10 trillion won for a supplementary budget to finance welfare programs and job creation. It may need more, given the current economic situation in which low-income families burdened by high debt are facing a “poverty trap.”

“We expect the Korean government to announce a supplementary fiscal package of 12 trillion won to boost domestic demand, slightly larger than it indicated earlier,” said Barclays in an analysis report.

“The extra spending will focus on improving the livelihoods of lower-income households.”

The investment bank added that such a move could further boost the 2.8 percent growth projected by the central bank, and would be as effective as key rate cuts of 75 basis points, removing the need to ease its monetary policy.

Korea’s fiscal stimulus plans also include expanding support for export financing for SMEs through the Export-Import Bank of Korea, which will increase financing to 74 trillion won this year, up from 70 trillion won.

Its real estate policy, which is expected to be unveiled next month, presently includes increasing public housing and financing support for the low-income group, while the government’s so-called People’s Happiness Fund, to be managed by the financial regulators and aimed at reviving the livelihoods of heavy debtors, will be further detailed in May.

The government’s real estate measures are expected to be drawn up together with the Ministry of Land, Infrastructure and Transport.

By Park Hyong-ki (hkp@heraldcorp.com)