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Economic Growth Forecast Raised to 5.8 Pct.

Posted June. 25, 2010 13:11,   


The government said Thursday that it has raised its economic growth forecast for this year from five percent to 5.8 percent on the strength of robust exports and recovering consumption.

Strategy and Finance Minister Yoon Jeung-hyun said, “Given the data from international organizations, this figure is possible and could rise even higher.”

The number of the newly employed reached 300,000 this year, up from the prediction made last year of 250,000. Private consumption growth also increased 4.6 percent, higher than the previous prediction of 4.2 percent, but inflation is expected to remain at 2.9 percent.

Fears are rising over price instability, however, amid soaring prices of international commodity such as oil and copper. The current balance is expected to finish 15 billion U.S. dollars in the black this year thanks to a surplus of 39.7 billion dollars in trade goods.

With the economy considered to have returned to normal from crisis mode, the government will shift its focus to bringing stability to low-income households.

For example, the withholding tax rate for day workers will be cut from eight percent to six percent. Based on last year’s data, 1.16 million day workers will each receive a tax benefit of 21,550 won (18.02 dollars).

A mid-term payment negotiation system for state-run corporations will limit price hikes for two to five years in advance to stabilize utility fees. The price ceiling will stop the Korea Electric Power Corp. and Korea Gas Corp. from raising utility fees on their own.

The cell phone payment system of charging by the minute instituted in December last year will be applied to all telecommunication companies to lower charges. Companies had charged fees for every 10 minutes, so a person who used 11 minutes had to pay for 20 minutes.

The declaration of fees by hakwons (private academic institutes) conducted by 134 provincial and municipal education offices will be applied to 180 such offices by year’s end to curb the rise in private tutoring fees.

In addition, more will benefit from the Hope Growth Savings Account, which is intended to encourage savings by low-income households from those that earn 70 percent of the minimum monthly living expenses per month (770,000 won or 643.80 dollars per three-member family) to 60 percent (660,000 won or 551.80 dollars).

This savings account is a financial product in which the government matches the amount a low-income individual saves from 50,000 won (41.80 dollars) to 100,000 won (83.60 dollars) every month for three years with funds created in the private sector.

Though intended to help low-income people, the grace period for double transaction taxes for multi-home holders was extended. This is because those who own two homes could be burdened by transaction taxes because they cannot sell their properties at the right time. The period ends at the end of this year.

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