South Korea sharply upgraded this year’s growth forecast to an 11-year high and pledged to shore up domestic demand, support businesses and exporters, and create more than 150,000 new jobs by maintaining an expansionary fiscal policy.
Gross domestic product is expected to expand 4.2% in 2021, which would be the fastest full-year growth since 2010, the finance ministry said in its bi-annual economic policy report released on Monday. That was a sharp upgrade from a previous forecast for 3.2% growth this year.
The ministry also said in a statement that it will create more than 150,000 new jobs through its planned extra budget to achieve early normalisation in the country’s labour market.
“Our economy is expected to continue its swift and strong recovery trend in the second half of the year thanks to a broader recovery globally and a boost in (the) semiconductor industry,” Vice Finance Minister Lee Eog-won told an embargoed news conference on Friday.
Exports will likely jump 18.5% in 2021 to a record $607.5 billion, thanks to growing global demand for memory chips, the ministry said. Exports slumped 5.5% in 2020, when global demand was hard hit by the coronavirus pandemic.
South Korea’s economy shrank 0.9% in 2020, posting the biggest full-year contraction since 1998, as COVID-related lockdown measures paralysed economic activity in Asia’s fourth-largest economy.
The ministry sees the economy growing 3.0% in 2022, supported by strong pent-up demand and improving global demand for memory chips.
The finance ministry aims to create the new jobs with the supplementary budget it is currently drafting, which it plans to submit to parliament by early July.
The second extra budget of this year is expected to be worth more than 30 trillion won ($26.55 billion), the country’s finance minister has said.
The government also announced a 110 trillion won investment project programme late last year, 58 trillion won of which will be spent during the second half of 2021 for investments in public housing, railroads and harbours.
Source: Reuters (Reporting by Joori Roh; Editing by Ana Nicolaci da Costa)