The Lee Jae-myung government is expected to actively promote economic stimulus in order to raise Korea's estimated potential growth rate, which has entered the 1% range due to low birth rates, aging population, and low technological innovation, to around 3%.
According to relevant authorities on the 8th, President Lee Jae-myung chaired an emergency economic inspection task force (TF) on the day of his inauguration, the 4th, and discussed the preparation of a second supplementary budget. During the meeting, President Lee asked about the fiscal capacity for the supplementary budget and its economic stimulus effect, and instructed active economic stimulus and risk management, said presidential spokesperson Kang Yu-jeong.
Following the president's instructions, the Ministry of Economy and Finance also moved swiftly, holding a meeting with the heads of planning and coordination offices from each department, chaired by Yoo Byeong-seo, head of the budget office. The key agenda of the meeting was the supplementary budget. In particular, there was a discussion about the need to discover projects for stabilizing people's livelihoods, which President Lee has emphasized.
Currently, the ruling party is proposing the scale of the second supplementary budget to be 20 trillion won. Jin Sung-jun, chairman of the Democratic Party of Korea's policy committee, appeared on a radio broadcast on the 6th and said, "Earlier this year, the Democratic Party stated that a supplementary budget of 35 trillion won was necessary," adding, "Subtracting about 14 trillion won from the 35 trillion won (for the first supplementary budget), we believe an additional amount of about 20 trillion to 21 trillion won is needed as the party's basic position."
Chairman Jin added that, during the first supplementary budget, the scale of support for recovery in people's livelihoods to overcome consumption and domestic demand shortages was too small, stating, "If possible, we should increase it so that this supplementary budget can act as a catalyst for recovering the people's economy."
Chairman Jin identified support funds for livelihood recovery as a key project. However, he noted that further discussions are necessary on whether to implement a universal support method for all citizens or to target vulnerable groups for selective support. This is interpreted as a comment on looking for a more effective method based on fiscal capacity.
Along with the supplementary budget, outlines of tax policy directions and regulatory reform are expected to emerge soon.
The government's economic ministries typically cooperate with the presidential office to release the economic policy direction for the second half of the year in June, tax reform plans in July, and next year's budget in August. Among these, the economic policy direction for the second half of the year is expected to be announced as the "new government economic policy direction" after discussions with the new government's economic control tower.
Regarding taxes, many experts forecast that while the direction of restoring tax cuts under the Yoon Suk-yeol government will be reviewed to secure tax revenue, it would be difficult to pursue an active tax increase policy given the economic situation. It appears that there will be an attempt to expand indirect tax revenue by reorganizing tax exemptions and tax expenditures.