Finance Minister Gu Yoon-cheol projected that South Korea's economic growth rate will exceed 2% this year, driven by a semiconductor boom and increased exports. He expressed hope for a smooth resolution to the ongoing strike at Samsung Electronics, emphasizing the importance of not missing opportunities during this favorable period for the semiconductor industry.
During a press briefing on May 11 at the Ministry of Economy and Finance in Sejong, Gu stated, "I expect this year's economic growth rate to surpass 2%. The exact extent will depend on the semiconductor boom and the impact of the conflict in the Middle East." He added that a specific growth rate forecast will be announced in the upcoming 'Second Half Economic Growth Strategy' report at the end of June.
Gu provided a positive assessment of recent macroeconomic indicators, noting that the first quarter GDP grew by 1.7%, significantly exceeding market expectations. He also mentioned that South Korea's exports have risen from seventh to fifth in the world, surpassing Japan and Italy. Additionally, he highlighted a current account surplus of $73.3 billion in the first quarter, showcasing the growth potential of the South Korean economy compared to the previous record of $39.2 billion in the fourth quarter of 2025.
However, he cautioned against overly optimistic views on economic recovery, stressing the importance of managing inflation and external risks. Gu acknowledged the uncertainties posed by the semiconductor market and the Middle East conflict, stating, "While the economic indicators are positive, the government will not become complacent. We will respond more meticulously to these challenges." He identified inflation as a pressing risk, assuring that the government will closely monitor living costs through special management and task forces.
In light of high international oil prices due to the Middle East conflict, Gu mentioned price caps and fuel tax reductions as measures to combat inflation. He indicated that the price cap would remain in place until stability is restored in the region, and he is initiating revisions to the price stabilization law to implement effective sanctions against hoarding and profiteering, including rewards for reporting and penalties for unjust gains. He noted that the sustainability of these policies will depend on future oil price trends and the geopolitical situation in the Middle East.
Gu reaffirmed the government's commitment to balancing supply expansion and demand management in real estate policy. Following the expiration of the temporary suspension of capital gains tax for multiple homeowners on May 9, concerns about a potential housing market freeze have arisen. He stated, "The government is coordinating with relevant agencies to expand supply and will manage demand until adequate housing supply is available."
He emphasized that the government's demand management strategy focuses on helping first-time homebuyers acquire housing, shifting the perspective from profit-making to ensuring housing stability.
Regarding the Samsung Electronics strike, Gu urged both labor and management to reach a peaceful agreement. He noted that the semiconductor sector is a key driver of export and growth forecasts, and labor disputes could hinder the industry's recovery. Gu expressed hope that the parties involved are working towards a resolution through the Central Labor Relations Commission, stating, "It would be unfortunate to miss opportunities during this critical time when the world is seeking semiconductor chips from Korea due to labor discord."
On the stock market, Gu emphasized the need to address undervaluation rather than focusing on short-term overheating. He remarked, "Based on the price-to-book ratio, South Korean stocks are still undervalued compared to developed countries. Given the pre-orders made until next year, this reflects the perspectives of both global and domestic investors on the potential of our stock market."
Gu maintained a cautious stance on inheritance tax reform, stating, "We are listening to various opinions regarding tax reform, but no decisions have been made at this time." He also commented on the government's sale of some NXC shares received as payment, noting that the shares were acquired at 5,534,000 won each and will be sold at 5,558,000 won, describing it as a successful transaction. The government expects to secure over 1 trillion won in non-tax revenue from this sale, contributing to foreign exchange market stability as NXC brings in foreign capital.
Gu addressed concerns regarding the missed meeting with U.S. Treasury Secretary Scott Bansen, who is visiting South Korea on May 13 ahead of the U.S.-China summit. He disagreed with claims of 'Korea passing,' stating, "We are in constant communication with the U.S. Treasury. Unlike in the past, meetings do not have to be face-to-face, and we are regularly updated through communications between deputy ministers. Minister Kim Jeong-kwan recently visited the U.S., ensuring good cooperation with them on investment matters."
* This article has been translated by AI.
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