“No Boosting of Economy for the Time Being”

It is predicted that there will be no measure to boost the economy fundamentally for the time being.

The government held a meeting of economic ministers, presided by Jeon Yun-cheoll, Deputy Prime Minister and Minister of Finance and Economy, at the building of the Korea Federation of Banks on the 14th and in relation to the recent economic situation they shared the same opinion that it was not the time to announce the measure to boost the economy although there were many causes of instability inside and outside the country.

The meeting has attendants including Shin Kook-hwan, Minister of Commerce, Industry, and Energy, Chang Seung-woo, Minister of Planning and Budget, Kim Jin-pyo, Minister of Office for Government Policy Coordination, Lee Keun-young, chairman of the Financial Supervisory Commission, and Lee Ki-ho, Presidential Secretary of Economy.

The government made clear that an irrational policy to stimulate consumption will bring about uncertainties in household loans and real estate, which are now dying down, adding, “The recently sluggish economy is attributed mostly to non-economic factors such as North Korea’s nuclear development program, thus we will maintain the basic policies and act with prudence in stimulating the economy.”

The government, however, decided to use 51.6 % of the total budget in the first half of the year as expected, in an attempt to prevent the domestic demand from sharply declining.

If a war in Iraq will shrink the economy rapidly, the government plans to expand the size of the budget even if it would mean to borrow money from the Bank of Korea.

In relation to the current movement of economy the government analyzed that along with the sluggish domestic demand, uncertainties like a looming war against Iraq and the North’s nuclear problems are causing greater uneasiness about the future economic prospects.

Kwang-Hyun Kim kkh@donga.com