Focused on Exports-Investment Activation for the Second Half of the Year

The government decided to keep the Macroeconomics policy of the first half of the year focused on ‘export and investment activation’ for the second half.

The government changed the annual growth rate prospect of the initial 5% to 6%, but will concentrate on the flexible business operation according to the situation.

Also, it will plan to complete the restructuring of the insolvent companies including determination of Hynix disposal direction in July.

The government checked the direction of the economy operation for the second half of the year and determined the basic economic policy in a meeting with economic ministers under supervision with the President Kim in Cheong Wa Dae on June 26.

Jeon Yun-cheol, The Deputy-Premier and Minister of Finance & Economy reported “The domestic business of the second half of the year will have the stable consumption and domestic demand such as a construction owing to increase trend of the business. Also, it will show the recovery in the export and facility investment”.

Accordingly, the government increased the GDP growth rate from 5% to 6%, and forecasted that the Consumer Price Index would be about 3% and a black-ink of ordinary profits would be more than USD 5 billion.

The finance of the second half of the year will be operated flexibly according to the business change, and the remaining budgets of KRW 2,400 billion will be used to pay the government’s debts or will be brought to the next year’s tax revenues.

Hynix will have the disposal direction in the next month based on a result of due diligence. △Daewoo Motor will establish the new corporation in September. △Hanbo Steel will make the Agreement with AK Capital in August.

Samsung Economic Research Institution increased the growth prospect of the year to 7% through the report of ‘economic prospect of the second half of the year’.

This institution forecasted that in the second half of the year, the increase of domestic demand would subside, but the exports would increase by 15% over the last year. Even though the World IT business has been recovered, the business of semiconductors, IT, electric home appliances and shipping will take a favorite turn as the market occupation of Korean products continuously has increased.

Especially, it is estimated that the world market occupation of Korean products will increased by the annual average of 0.055% for 5 years after World Cup 2002.

The institution proposed that Korea economy has the large business change such as skyrocketing and quick cooling of the business. Accordingly, the government must concentrate on keeping the stable basic policy and improving the export & investment atmosphere”

Yeon-Su Shin Rae-Jeong Park ysshin@donga.com ecopark@donga.com