The economy is facing multi-faceted challenges as there are growing concerns about economic slowdown amid high prices. Volatility in the financial and foreign exchange (FX) markets is rising due to external factors such as major economies’ accelerating tight monetary policies with a surge in raw material prices fueling consumer prices in Korea. Subsequently, the economy is projected to see slowdowns in exports and investment, requiring immediate policy actions to address such challenges. Additionally, the lingering fundamental problems of the economy are also having a major impact.
The government-led approaches and excessive regulations have dampened the private sectors, largely undermining the capability for growth and job creation. In addition, population has started to decline with the lingering structural problems dragging on productivity growth. Korea’s total factor productivity is less than half the level of major advanced countries due to ineffective public fiscal management, labor market and education systems, and delayed reforms in the financial and service industries. As a result, Korea’s economic fundamentals have faced significant declines since the 1990s with its potential growth rate falling to as low as two percent. Against this backdrop, the new government has drawn up its four economic policy directions.
Framework of economic policy directions
The government has drawn up four policy directions based on four pillars constituting Freedom, Fairness, Innovation and Solidarity, aiming to overcome low growth and create a virtuous circle of growth and welfare.
The policy directions focus on achieving 1) the dynamic economy that puts the private sector at the core of the economic policy, 2) the economy that pushes toward economic leaps by addressing structural problems, 3) the leading economy that prepares for the future, 4) the inclusive economy that leaves no one behind.
* For further details, please refer to the attached file