During the Expanded Macroeconomic Finance Meeting held at the Government Seoul Building, Koo reviewed current issues in macroeconomics, finance, and risks in vulnerable sectors. This meeting marked the first attendance of the Bank of Korea's governor since the meeting's inception in April, allowing for a comprehensive examination of the macroeconomic and financial market conditions. The Ministry of Finance and Economy plans to operate these expanded meetings with increased participation from relevant agencies, considering the nature of the agenda and policy issues.
Participants noted that the South Korean economy is currently performing well. In the first quarter of this year, nominal Gross Domestic Product (GDP) increased by 17.1% compared to the previous year, marking the highest growth since the third quarter of 1995, which saw a 19.2% increase. This growth is attributed to improved corporate performance driven by a semiconductor boom and rising exports.
Additionally, exports surged by 53.2% year-on-year last month, contributing to an expanded current account surplus. According to the Bank of Korea's report on the balance of payments, the current account surplus reached $28.29 billion in April, maintaining a surplus of over $20 billion for three consecutive months.
The meeting emphasized the need to invest the increased tax revenue, as favorable economic conditions suggest that future revenues are likely to rise. Koo remarked, "We must utilize the expanded fiscal capacity for investments aimed at enhancing potential growth rates and addressing issues such as polarization and the burden of living costs due to inflation."
There was also a consensus on the necessity of fiscal structural reforms and expenditure restructuring to ensure efficient fiscal management.
Lastly, the meeting addressed the increased burdens on vulnerable sectors due to heightened financial volatility. Participants expressed concerns that rising interest rates could exacerbate repayment burdens for low-income and low-credit borrowers, as well as small business owners. They also reviewed risks associated with rising exchange rates affecting small import and processing companies and the volatility in stock prices impacting leveraged investments.
Participants agreed on the importance of strengthening cooperation among relevant agencies to stabilize the economy and manage risks. They emphasized the need for harmonious macroeconomic policies in the face of rapidly changing conditions and committed to enhancing collaboration on economic growth strategies for the second half of the year.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.