Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il projected that South Korea's economic growth rate could reach between 3.4% and 3.6% this year, provided there are no external shocks or unexpected variables. This forecast is based on strong trends in semiconductor exports and facility investments.
During a press briefing on October 16 in Bangkok, Thailand, Lee stated, "If no significant external events occur in the remaining period, I believe a mid-3% growth is possible." This mid-3% range translates to 3.4% to 3.6%, exceeding both the government's growth forecast of 3.0% and the International Monetary Fund's (IMF) revised estimate of 3.3%.
The government had announced a growth forecast of 3.0% in its economic strategy for the second half of the year released in July. The IMF raised its forecast for South Korea's growth to 3.3% in its World Economic Outlook published on October 13. Lee noted, "The third quarter looks promising," citing favorable trends in exports and facility investments. According to the Bank of Korea, the real GDP grew by 1.8% in the first quarter and 0.6% in the second quarter of this year.
Lee also expressed optimism about a potential rebound in the long-term growth rate, stating, "Given the recent growth trends and composition, I believe we can escape the downward trend in potential growth rates and see a rebound. I think that time is approaching, and in some ways, it may be imminent." He suggested that expanding facility investments could enhance the economy's long-term growth foundation.
To respond to rapidly changing economic conditions, the government is considering increasing the frequency of economic outlook announcements to three times a year starting next year. Currently, updates are provided twice a year at the end of the year and at the end of the first half. Lee remarked, "It seems appropriate to make economic forecasts more accurate and to respond to areas that require additional measures within those forecasts." This could mean that a separate economic growth strategy for the second half of the year may not be necessary.
Regarding the housing market, Lee mentioned, "We are considering additional capital gains tax reductions if rental apartments in adjustment areas are sold to public entities like the Korea Land and Housing Corporation (LH) for public use." This aims to encourage property disposals by rental businesses, thereby stimulating transactions and alleviating tenant rental anxieties.
Lee also announced plans to directly oversee the Yeongnam mega-project task force, which will focus on identifying key tasks for the Yeongnam project, one of three major mega-projects overseen by the Ministry of Economy and Finance, and enhancing inter-agency coordination.
He outlined plans for communication with the electric vehicle industry, stating, "I mentioned during the National Assembly audit that I would gather additional opinions related to electric vehicles, and I plan to visit electric vehicle production sites in early November to hear industry feedback." Amid increasing competition from Chinese electric vehicles in the domestic market, there have been ongoing calls for policy adjustments, particularly as the government's 2026 tax reform proposal excludes electric vehicles from domestic production tax credits.
On the establishment of a strategic sovereign wealth fund, which is currently in the legislative proposal stage, Lee expressed optimism about potential cooperation with foreign sovereign funds. He explained that through domestic and international investments, strategic industries could be nurtured, and during his visit to Bangkok, he explored ways to share operational experiences and collaborate with sovereign funds from Saudi Arabia and Singapore.
In response to questions about the recent appointment of a former Financial Services Commission official as the first vice minister of the Ministry of Economy and Finance and the anticipated relocation to Sejong next year, Lee stated, "Collaboration with the Financial Services Commission is already going well, and I believe communication will improve with Vice Minister Kwon Dae-young's arrival." However, he refrained from making specific comments about potential organizational restructuring.
* This article has been translated by AI.
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