South Korea plans the biggest budget increase in 10 years
South Korean President Moon Jae-in’s government plans to spend 471 trillion won ($ 420 billion) next year to boost the economy by creating jobs, raising minimum wages and stimulating innovative growth.
The budget for 2019 calls for spending to increase by 9.7 percent from the initial budget for last year, the biggest jump since the global financial crisis in 2009, the Finance Ministry said in a statement. The ministry said spending on job creation would raise a record, while spending on infrastructure would fall.
Moon acceptance rates have fallen to their lowest level since their election in May 2017 as the economy suffered from adverse winds. He pledged to be a “chief of jobs” and to create a more just society, but faced a backlash over an aggressive increase in the minimum wage that some blame for a slowdown in employment.
Both the government and the Bank of Korea have cut their forecast for economic growth this year to 2.9 percent from 3 percent. Employment is rising, but at a slower pace. The unemployment rate rose to 3.8 percent in July, according to Korea’s statistics.
The Bank of Korea has kept its benchmark interest rate at 1.5% since lifting it from a record low in November.
Finance Minister Kim Dong-Yeon said last week the government would stress “the active role of fiscal policy” in meeting the country’s economic challenges, including “very difficult” employment conditions.
Kim said the budget proposal calls for a record spending of 24 trillion won to promote employment, including more jobs for the elderly, the disabled and women. He said some of these funds would provide indirect support to create jobs in the private sector.
To boost innovative growth, the government will expand its research and development investments by 3.7 percent to 20 trillion won.