In a meeting of economy-related ministers last week, outgoing Finance Minister Choi Kyung-hwan went out of the way to defend his handling of the Korean economy, which is estimated to have grown by 2.7 percent last year.

Choi, who concurrently serves as deputy prime minister for economic affairs, said the 2015 growth rate, down from 3.3 percent in 2014, was still the third highest among major countries with a per capita income of more than $20,000.

His remarks implied that Asia’s fourth-largest economy would have remained further sluggish without a set of measures he had introduced to bolster domestic demand. He had previously said the country’s economy could expand by nearly 4 percent in 2015 unless its exports decreased. Korea’s exports fell by 7.9 percent from a year earlier to $527.2 billion last year, while its imports plummeted by 16.9 percent to $436.8 billion, according to figures released by the Ministry of Trade, Industry and Energy on Friday.

Government policymakers expect a continuous rise in domestic consumption will help push up the growth rate to 3.1 percent this year.

But data made available by the national statistical office on the same day that the latest meeting of economic ministers was held deepened concerns that the country’s economy might be pushed over a consumption cliff in the early part of the year.

Retail sales declined by 1.1 percent from a month earlier in November, marking the first monthly fall in five months, according to figures from Statistics Korea.

Statistical officials attributed the decrease partly to a base effect, given that retail turnover rose by 3.2 percent in October mainly due to government-led nationwide sales promotions.

But many economists see it as signaling that domestic consumption may be falling sharply in the first quarter of the year as nearly all available stimulus measures have been used.

In the second half of 2015, the government put forward an additional fiscal spending package worth 22 trillion won ($18.6 billion), lowered excise tax rates and prodded companies to join sales promotion events. The effect of these measures will mostly disappear in the months to come, causing the economy to suffer a plunge in domestic demand, economists say.

Adding to this concern, the consumer composite sentiment index slid by 3 points in December, reversing five consecutive months of rise, according to recent data from the Bank of Korea. In the central bank’s survey of about 2,800 local companies last month, a quarter of them said a slump in the domestic market was the most serious concern for them, while 10.1 percent cited sluggish exports.

“It may be inevitable that the economy will be pushed to the brink of a cliff as a result of encouraging consumers to use up money in advance,” said a researcher at a state-funded research institute, requesting anonymity.

Announcing the economic policy directions for 2016, the government said it would frontload nearly 30 percent, or 135 trillion won, of fiscal spending in the first quarter in an effort to avoid a steep decline in domestic demand.

Officials at the Ministry of Strategy and Finance concede there is no other effective policy tool left to bolster domestic expenditure.

A ministry official expressed hope that low oil prices and improved employment would continue to shore up domestic demand.

His wishful thinking fell far short of the request made by President Park Geun-hye in a recent meeting with her aides to work out intensive measures to preempt a possible plummet in domestic expenditure. Her instruction reflected the concern a sharp fall in domestic demand at a time exports continue to decline would further drag down growth, hampering her administration’s efforts to accelerate structural reforms.

“Whatever additional, if any, measures might be taken, they could do little to bolster domestic spending,” said Shin Se-don, an economics professor at Sookmyung Women’s University in Seoul.

Economists worry that consumers may further tighten their belts as possible interest rate hikes will heighten the household debt burden and household income is growing at a slow pace with few new decent jobs being created.

In a meeting with reporters last week, Finance Minister Choi, a three-term lawmaker, said he would be willing to do whatever he could to help his successor revive the economy when he returned to the parliament.

But Choi’s critics noted his remarks sounded hollow, as he would leave his successor with few effective policy tools to shore up domestic demand. Former Transportation Minister Yoo Il-ho, who is to take over from Choi after a parliamentary confirmation hearing this month, may eventually have to ponder whether to further expand government spending at the risk of hurting fiscal soundness, they say.

By Kim Kyung-ho (khkim@heraldcorp.com)