Thank you all for your hard work.
The second half of this year is a crucial period when we have to achieve a faster and inclusive recovery and leap forward in the economy while reaching herd immunity and returning to normal daily lives. The Government’s 2021 economic policy laid out two goals: a swift and strong economic recovery and a great transformation into a pacesetting economy. The relatively successful groundwork was laid in the first half of the year. We have to produce tangible results for the people in the second half.
Also participating in today’s discussion about the economic policy direction for the latter part of the year are the Floor Leader Yun Ho-jung and Policy Committee Chairperson Park Wan-joo from the ruling Democratic Party of Korea. Thank you for joining us.
Our economy is recovering at a pace far faster than that predicted by experts and markets. Korea’s GDP sprang back to its pre-COVID-19 level in the first quarter, the first among major advanced economies. Exports posted a record high and investments swelled by a large margin in the second quarter as well, continuing the economic upturn. We are now even able to anticipate a possible annual growth rate that exceeds 4 percent, well over the previous target of 3.2 percent, on top of exports hitting an all-time high this year. The success of Korea’s response to COVID-19, which has been made possible by our people, has enabled us to stay ahead of others economically as well. All of this is attributable to businesses and labor coming together to foster the potential of our economy – which, once again, shines brightly in the face of a crisis. Disease control authorities and economy-related ministries and agencies, which have brought the crisis under stable management, have also had immense hardships.
As the economic recovery has been achieved jointly by everyone, the fruit must be shared together. Only then will it become a full-fledged recovery. The number employed has been increasing recently, but the recovery of jobs in face-to-face service industries has been lagging. Young people and women still have difficulties finding work, and the sacrifice and suffering of the self-employed also continues. An uneven recovery intensifies market income inequality.
Despite this situation, the Government’s active fiscal policy has helped improve income distribution significantly, having a positive impact on the disposable income quintile ratio for two consecutive quarters. I believe this is what the role of the Government in times of crisis is all about.
In the second half of this year, the overriding goal of our economy is to completely overcome the crisis, which will enable us to increase jobs and narrow divides. The Government will mobilize all of its capabilities to achieve growth that tops 4 percent for the first time in 11 years and a job rebound that surpasses last year’s employment declines.
With our economy showing improvements, our fiscal space has also expanded. I urge you to push the second supplementary budget as early as possible so that our tax revenue surplus, which is forecast to exceed 30 trillion won, can be used to further boost economic vitality and support the lives of people in need. The immense tax revenue surplus can be seen as the effect of a virtuous cycle from our expansionary fiscal spending and a clear sign of economic recovery. On top of the supplementary budget, I ask you to devise various policy measures, including tax incentives, financial backing and institutional improvements.
In particular, domestic demand and service industries must be clearly turned around as they affect job creation tremendously. I urge you to combine the supplementary budget with already planned means, such as vouchers and the Korea Sale Festa event, to implement all-encompassing measures that shore up domestic demand. Simultaneously, the state of epidemic control and inoculation must be monitored. In order to help replenish the spending power that households have lost, we must provide support for low- and middle-income earners and implement bold measures to boost spending.
COVID-19’s severest blow has fallen on the most vulnerable in our society. Government support should also be focused more on those with the direst of needs. The public sector should take the initiative to create more jobs for the vulnerable until businesses are able to increase employment to surmount the job crisis. Support should be given to the self-employed who have sustained damage due to restricted business hours, and the culture, arts and tourism sectors deserve special assistance as well.
Amid the COVID-19 crisis, young people at the start of their careers have had to suffer. The difficulties they face directly translate into hardships for their parents’ generation as well as pain across the whole of society. We should provide close-knit support for jobs and housing, thereby serving as a “ladder of hope” for young people. In particular, I urge you to focus on creating as many quality jobs as possible in areas that are needed by businesses and preferred by young people, such as software engineering and artificial intelligence.
It is necessary to make impeccable preparations in order to introduce universal employment insurance and injury and sickness benefits by expediting efforts to strengthen the employment and social safety nets. At the same time, policy tasks for which public consensus has already been formed, such as abolishing the family support obligation criteria, must be implemented at the earliest date possible.
Countries around the world are now seeking to “build back better” after the COVID-19 pandemic. Large-scale fiscal investments are being made to enhance competitiveness in the digital and green sectors, and the move to reorganize the global supply chain has been accelerating. The Korean New Deal has proven to be the right direction to lead in the post-COVID-19 era. From the start of my term, this Administration has further strengthened the competitiveness of flagship industries such as ICT, semiconductors, batteries, shipbuilding and shipping. In particular, we were able to turn a crisis into an opportunity by nurturing system semiconductors, future cars and biohealth as three new growth sectors, which turned out to be ideal choices.
The world highly values the potential and possibility of the Republic of Korea’s economy. Korea ranked first in the world in the Bloomberg Innovation Index that came out in the beginning of this year. In the 2021 European Innovation Scoreboard released last week, the nation also came in first among global competitors, including the United States, Japan and the European Union. The Korean economy is no longer on the periphery of the global economy; it has come to hold an important position within the competitive global supply chain.
We must make the best of this unparalleled opportunity. We should use this as an opportunity to leap forward into a pacesetting economy that leads the post-COVID-19 era by doing more than just surmounting the crisis. That goal has already begun to materialize. I ask you to be confident that our economic policies for the second half and next year will make achieving the goal more likely.
Amid the COVID-19 crisis, our economy has been doing very well so far. The hopes for surmounting the crisis and confidence in building a stronger economy have also been growing.
I urge you to be sure to accomplish an inclusive recovery and leap forward that prevents the expansion of inequality that easily intensifies amid crises and uneven recoveries. Moreover, in the process of a great transformation to a digital and low-carbon economy, we should also achieve a just transition; our active support can help companies reorganize their business lines and workers switch jobs smoothly so that no one is left behind. Now is the time to guard against ability- and competition-based “market triumphalism” and to focus on policies for mutual benefit and inclusiveness. I believe that the Government’s most important role at this time is to correct the market inequalities and injustices prone to intensify in times of crisis.
I would like to see our hopes and confidence in a complete economic recovery and great leap forward to a pacesetting nation come to fruition through the economic policy direction for the second half of this year that we have come together today to prepare.