Money Today Reporter Park Kwang-beom, Sejong=Reporter Yoo Jae-hee | 2023.03.12 06:19
The government is introducing a stimulus package to boost consumption. This is to protect as much as possible against the economic slowdown by boosting domestic demand in a situation where shrinking consumption is worsening due to high interest rates and high prices. It appears that the focus of the stimulus package will be on ‘reviving tourism’.
According to government officials on the 12th, the Ministry of Strategy and Finance is reviewing measures to boost domestic demand in conjunction with related ministries. This is the first time the Yoon Seok-Yeol administration, which introduced a fiscal austerity policy, has revised a domestic stimulus package.
It was also in accordance with the instructions of President Yoon Seok-yeol. At a meeting of senior secretaries on the 27th of last month, President Yoon said, “The common people are suffering a lot because of the side effects of the oligopoly system with high prices and high interest rates.”
The reason why the government started revising the domestic demand stimulus plan is that even the domestic demand, which will support the economy, is trembling amid the recent sluggish exports. The government intends to draw up countermeasures to boost domestic demand as the slowdown in domestic demand could lead to a contraction in employment in all directions, further exacerbating the economic collapse.
In fact, private consumption growth this year is expected to slow significantly compared to last year. In a report recently released by the Bank of Korea, it said, “Private consumption growth will slow significantly this year due to the increased burden of repayment of principal and interest due to the increase in interest rates and the sluggish housing economy.”
This is because there is less money to spend and consumer sentiment has shrunk. According to the Bank of Korea, the rate of increase in the real purchasing power of Korean households this year is expected to be 0.7%.
It is analyzed that this year will retreat more than the 3.5% in 2021, which was reduced to 3% last year. Above all, concerns are high that the burden of repaying the principal and interest on loans, which has risen due to the high level of household debt and the share of floating rate loans compared to large countries, will limit on the use.
In a recent press conference, Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho said, “In relation to domestic demand, people’s livelihood is particularly difficult, so there was a critical thought that further consumption should be stimulated , and there was the matter of reviving domestic demand.” We work together because we share such critical thinking.”
It is known that the focus of the domestic stimulus package will be on ‘reviving tourism’. In addition, △self-employed and small business △ support schemes are expected to be discussed further.
In May 2020, at the start of the Corona 19 (COVID-19) outbreak, the government came up with measures to stimulate tourism as part of a plan to revive domestic demand. At that time, the government began to revive domestic demand by extending the travel week from two weeks to a month and providing 1 million accommodation discount coupons worth up to 40,000 won. Even after that, in order to promote the vitality of domestic demand, which has been stagnant due to Corona 19, it has supported usage coupons under the name ‘Lodging Daejeon’.
In particular, the government invested 56.5 billion won in the name of fall holiday support in November 2021, and it is analyzed that about 780,000 coupons were issued for 6 weeks at the time, contributing to the promotion of the domestic economy, including selling 94.4 billion won and travel consumption of 310.8 billion won.
However, the government took a cautious stance, saying that the specific direction of the domestic demand stimulus package and the timing of the announcement have not yet been finalised. A government official explained, “This is the stage of gathering ideas that can revive domestic demand in various areas, including related ministries and domestic tourism.”
Deputy Prime Minister Chu also said, “We are currently considering measures related to domestic demand for some difficulties (people’s livelihood) and areas that need (government policy support).”
[저작권자 @머니투데이, 무단전재 및 재배포 금지]
