South Korea's finance minister-designate said Wednesday the country's economy will grow 5 percent next year, and the government would not implement policies aimed at artificially boosting the economy.
"We are expecting the economy to grow at a growth potential rate of 5 percent next year," Kwon O-kyu said at a confirmation hearing at a parliamentary subcommittee.
The South Korean economy, Asia's fourth largest, might have expanded in the upper-5-percent level in the first six months of the year, but economic expansion will slow to an upper-4-percent level in the second half, he said.
The nominee said policy priority will be placed on creating more jobs, which will help distribute income more evenly.
Kwon was appointed as the country's top economic policymaker by President Roh Moo-hyun earlier this month, succeeding Han Duck-soo.
The economy is estimated to have grown 5.8 percent in the first half from the same period of the previous year, the central bank forecast earlier. For the full year, it is expected to expand around 5 percent following last year's 4-percent gain.
But it is facing high energy prices and the strengthening of the Korean won to the U.S. dollar. The country is the world's 4th-largest oil importer, and the local currency has gained around 6 percent against the greenback so far this year.
"The economy is growing at a potential rate... and we plan to maintain a stance of not boosting the economy artificially," Kwon said.
Last week, the Bank of Korea, the country's central bank, froze its key interest rate at 4.25 percent, but strongly signaled that it will hike borrowing costs citing increased inflationary pressure that stems from rising oil prices and the economic recovery.
Last month, the bank raised the policy rate by a quarter of one percentage point.
Kwon said it is desirable to maintain current anti-speculation measures aimed at curbing a sharp rise in housing prices.
He also said the government will be able to finance increased spending on social welfare without tax increases.
"We don't see any needs to set up new tax title or raise tax rates, to resolve widening social and economic disparity," said Kwon.
South Korea is forced to spend big on boosting the country's record-low fertility rate, supporting the aging society and beefing up social welfare.
Seoul, July 12 (Yonhap News)
S. Korean economy to grow 5 pct next year, finance minister-designate says |
