The Ministry of Finance is gearing up to support economic stability, enhance growth momentum, address inequality, and strengthen global competitiveness as it rolls out its economic growth strategy for the second half of 2026. The plan aims to manage inflation within an annual rate of 3% while responding to industrial structural changes driven by artificial intelligence (AI) and green transition (GX), alongside promoting regional balanced development and public finance reforms.
During a work report held at the Blue House on July 14, chaired by President Lee Jae-myung, the ministry outlined key initiatives for the second half of the year, including stabilizing the economy, enhancing potential growth rates, addressing inequality, and elevating South Korea's global economic standing. Heo Jang, the Second Vice Minister of Finance, stated, "We will actively support the economic growth strategy for the second half of 2026 to enhance potential growth rates while simultaneously promoting structural innovation and revitalizing the economy for the public."
To manage consumer price inflation within 3% for the second half of the year, the government plans to launch the largest-ever discount events for agricultural, livestock, and fishery products, along with emergency imports of fresh eggs and increased supply of seafood to stabilize food prices.
Considering international oil prices and supply-demand conditions, the government is also reviewing whether to extend fuel tax reductions and plans to freeze public utility rates, including electricity and gas, for the second half of the year. Additional energy vouchers for low-income households and fuel subsidies for truck drivers and farmers will continue. Furthermore, the government is pushing for amendments to the price stabilization law to introduce penalties for hoarding practices.
In the employment sector, the government will develop tailored workforce training and job creation strategies in response to industrial structural changes due to AI transition (AX) and GX. It plans to analyze the causes of employment stagnation in sectors like manufacturing and construction and will sequentially announce sector-specific measures in collaboration with relevant ministries.
Policies aimed at enhancing potential growth rates will also be actively pursued. The government will expedite the use of state-owned land and public feasibility studies to support the successful implementation of three mega-projects and will provide regional tax incentives for businesses and workers. Tax benefits for research and development (R&D), investment, and employment will be expanded, particularly in non-capital regions, and tax exemptions will be offered for relocation support payments made by companies to their employees.
The nurturing of strategic industries such as AI, quantum technology, and defense will be prioritized. The Ministry of Finance plans to establish a strategic economic advisory group to identify leading projects in these sectors and expand budget and financial support. Initiatives to create an ultra-innovation economy fund, pilot projects for advanced technology insurance, and the establishment of a strategic export finance fund are also in the works to strengthen the commercialization and investment foundation for new industries. A separate green transition strategy will be developed to promote tax incentives and investment in future energy industries, including renewable energy, nuclear power, and next-generation power semiconductors.
Policies addressing inequality will focus on supporting youth. The government aims to train over 200,000 AI specialists by 2030 and create more than 300,000 youth jobs and entrepreneurial opportunities through public and private initiatives. Plans also include expanding public rental housing for young people, introducing youth ISAs, and supporting asset formation for young workers in small and medium-sized enterprises. Additionally, the government will work on growth support for small businesses and improve the earned income tax credit (EITC) criteria for low-income working families.
Tax, finance, and public sector reforms were also included in the work report. The government plans to reassess all tax expenditures from scratch to streamline inefficient tax relief systems and will establish a treasury management system utilizing AI and blockchain technology. The management of state-owned assets will shift from simple preservation and sale to value-creating operations, and public institutions will enhance functionality, expand AI utilization, and strengthen safety management. The government also intends to reform the innovative procurement system to enhance public procurement's role in generating initial demand for new technologies.
Regional growth strategies have been identified as a key focus. The government plans to discover new growth engines in local areas and establish innovative ecosystems tailored to regional industrial characteristics. To this end, it will prepare a support package encompassing finance, taxation, regulation, technology, talent, and infrastructure, while expanding tax incentives for businesses and workers outside the capital region. Improvements will also be made to public procurement and public institution management evaluations to encourage regional economic revitalization and the hiring of local talent.
* This article has been translated by AI.
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