Creating more jobs and boosting business investment are key goals for South Korea in 2007, the country's top economic policymaker said Monday.
In a press conference to mark the start of the new year, Minister of Finance and Economy Kwon O-kyu said the country faces a set of challenges and opportunities in the coming months.
"The global economy, led by the United States, is expected to post weaker growth compared to last year, while domestic consumption is likely to be checked as well," Kwon said.
A weak global economy is bad news for a country that relies heavily on trade for growth, while consumption remains sluggish as the country begins to feel the pinch from high crude oil prices and unfavorable trading conditions.
"Waning consumption late last year and the economy's inability to create a sufficient number of jobs reflects these developments," Kwon told reporters.
The number of jobs created last year stood at around 300,000, down from 350,000 that Seoul said could be created early in the year.
Kwon said to remedy the lack of new jobs, efforts are underway to improve the competitiveness of the service sector.
South Korea's economy, the fourth largest in Asia, grew by 5 percent last year, although its gross national income (GNI) has remained stagnant for two years. This had an adverse impact on how the public views the economy.
On the positive side, he said, while there were some downside risks, leading indicators pointed to solid growth in business investment, on par with last year.
The government said business investment grew by around 7.4 percent in 2006, and predicted it could grow 7.2 percent this year.
The domestic economy may pick up pace in the second half, with construction industry making a rebound and exports likely to grow by around 10 percent annually, Kwon said.
Regarding free trade agreement (FTA) talks with the United States, the policymaker said Seoul and Washington are moving to conclude a pact in the first quarter of this year.
Kwon claimed that the five previous FTA talks laid the ground rules so talks can now move forward in earnest.
"The first four meetings allowed both sides to outline their wish lists and opened the door for closing the differences that exist by particular sector and industry," the official said. He added that the fifth meeting held in December allowed negotiators to see the "big picture" on trade and where the priorities of the other rested.
Kwon said that based on the views exchanged, the sixth round of talks scheduled for this month should allow the two sides to reduce existing differences.
Both sides have expressed a wish to seal a deal by the end of March to allow for a 90-day parliamentary review. This should allow Seoul and Washington the ratify the agreement before U.S. President George W. Bush loses his "fast-track" trade promotion authority on June 30.
The official then said that Seoul's real estate policy will remain unchanged, with policies aimed at curbing speculation and increasing supply being pursued.
The minister said plans to further liberalize foreign investment by locals will be announced in the near future and hinted that the government is planning to ease existing restrictions to a considerable degree.
"There is excess liquidity in the local market and it is the government's intention to allow this to be invested abroad by easing restrictions," he said.
The official, meanwhile, said that he supported proposals to reduce the mandatory period of military service as a means to alleviate labor market shortages.
"There have been considerable studies done on this matter and it will have a beneficial effect on the economy," the official said.
Seoul, Jan. 1 (Yonhap News)
Job creation, biz investment key goals for 2007: finance minister |
