Report on new economic team

The underlying principle of economic policy this year as determined at the first meeting of Finance Minister Jin Nyum`s new economic team can be summarized as completing ongoing reforms in the four major sectors -- corporate, finance, labor and public -- and inducing a soft landing for this year`s economy. This differs little from the basic principle of the economic application followed by the former finance minister, Lee Jae-Hyun and may indicate that the new economic team has not shown its true colors.

However, if we examine the details, discrepancies are apparent in the direction of the reforms, speed, and where the center weight is for macroeconomic policies. Fundamentally, the application tries to reflect market demands in reforms and promote its evolution. The economic policies are no longer finance-oriented and closely deal with business conditions at both extremes.

Promotion of reforms for market evolution: During the meeting, finance ministers pushed for continuous reforms, conscious of public criticism that reforms lack vigor. Finance minister Jin emphasized that the government will adhere to its original principles in dealing with the Hyundai crisis at all times. Han Sung-Tak, who is in charge of the economic policies of the ministry of finance and economy, also stated that the government will do its best to reform the managing structure of companies and dismantle insolvent companies. He further stated that the government¡¯s reform will focus on empowering the market. The ministry of finance and economy explained that using alleviated restrictions as an important factor for budget planning demonstrates that the government fully supports the revival of market functions. Moreover, expanding the limit of deposit guarantees and creating additional public funds as mentioned by finance Minister Jin at his inauguration encourages proximity between the market demands and the policies. However, some are worried that the evolutionary market reforms may slow down the restructuring of the finance sector and create moral hazards at a different level.

Prepare for business conditions at both extremes and ensure the soft landing of this year economy : The most notable thing about the meeting was that some ministers expressed concerns over the fundamentals of our economy. Although Minister Jin optimistically asserted that the economy has entered a stable growth phase, the new ministers expressed concerns over increasingly polarized regional and industry-wise business conditions. The government decided that the time has not yet come for the complete overturn of the economic policy framework. The government will adhere to its existing target ratios for macroeconomic indexes by keeping the annual economic growth rate at the 8% level, the trade balance surplus at 10 billion to 12 billion U.S. dollars and the consumer price index growth rate at 2.5%. The government will pay close attention to minute details of the industry sites and working fields. The new economic team mainly consists of personnel with planning backgrounds, indicating that the economic policies will not focus only on finance but other areas as well. The new team`s stern will to secure growth potential for the digital age, foster venture businesses and regional economies, privatize public companies, create more substantial pensions for public workers and boost social security systems seems not indifferent to its continuity.