Good afternoon. At the 6th Emergency Economic Council meeting today, we will discuss the direction of economic policy for the second half of the year and the 3rd supplementary budget proposal. Amidst the global economic crisis caused by the COVID-19 pandemic, Korea is viewed as having fared relatively well in its crisis response. Even though we posted negative economic growth in the first quarter, our rate was tolerable compared with those of other major economies. The outlook for our annual growth also remains the highest among the OECD member states.
All of this is attributable to our fight against COVID-19 having brought the outbreak under control at a relatively early stage and our economic countermeasures having been implemented in a swift and bold manner. Emergency relief payments have also given immense encouragement to the people who are suffering difficulties, considerably boosting consumption for businesses in residential neighborhoods and local commercial districts. I extend my compliments once again to our infectious disease prevention and control authorities and economic authorities for their hard work and achievements.
The prolonged COVID-19 situation is aggravating the global economic crisis by the day. It is not easy to even predict where the bottom is and when the economy will bounce back. Our economy’s second-quarter growth is again running negative – at a rate worse than that of the first quarter. The employment situation has deteriorated, and the declines in exports have expanded further. The growing state-centered nationalism and the tensions between major powers are also putting a substantial strain on our economy.
The Government intends to cope with this grave situation by setting the direction of economic policy for the second half one month earlier than the previous year. We must achieve a rebound in growth by quickly restoring our economy in the latter half of this year. Moreover, we have to lay the foundation for a pace-setting economy in order to stay ahead in the post-COVID-19 era. At the same time, we should expand the framework of an inclusive nation to protect the people’s lives in a crisis and to prepare for the major employment changes expected to accelerate in the era of the digital economy. The direction of our economic policy for the second half of this year reflects such government resolve.
First of all, we will place top priority on surmounting the economic crisis and mobilize every fiscal capability available to the Government. In order to continue bold fiscal injection in the second half, the Government – with this 3rd supplementary budget – has drawn up the largest single supplementary measure in our history. I earnestly appeal to the National Assembly to swiftly deliberate over and pass the relevant proposal that’s scheduled to be submitted this week. I hope the lawmakers will consider that even with the 3rd supplementary budget, the rise in our sovereign debt-to-GDP ratio is much less than those of other major economies.
In addition, we will further enhance our role as a buttress for both the businesses and people facing difficulties. We will focus on safeguarding the self-employed, microbusiness owners and companies in crisis, with emphasis on protecting people’s jobs. We will significantly increase support for retaining employees and expand our employment and social safety nets, for instance, by eliminating blind spots in employment insurance and providing emergency jobs.
The Government will also deploy all possible measures to hasten economic recovery. At a time when conditions for international trade remain very difficult, we will focus on stimulating domestic demand, thereby enabling it to serve as the foundation for economic recovery. We’ll significantly expand fiscal spending and tax benefits to massively promote consumption and revitalize domestic travel. We will provide active support for private sector investment and have the public sector lead through investments in the infrastructure for neighborhoods. The Government will speed up implementation of projects designed to revive local economies and promote balanced national development. We will also devise an all-out support system to hasten the recovery of our exports. We will expand our comprehensive online support system for exports and it will be focused on exploring overseas markets for well-received Brand K-certified products, including Korea’s COVID-19 response, K-pop, K-beauty and K-food.
Meanwhile, at today’s Emergency Economic Council meeting, I’d like to clarify the meaning and direction of the Korean version of the New Deal as a national project to stay ahead in the post-COVID-19 era. This Korean New Deal is a new national development strategy to leap from being a fast-follower to a pace-setter. In the belief that our country’s future hinges on it, we will resolutely push ahead with the Korean New Deal, which will erect two pillars – a Digital New Deal and Green New Deal – side by side atop the foundation of an inclusive nation and of values that put people first. In the process of transforming our fast-follower model economy into a pace-setting one, we will open up new opportunities for creating a great number of new jobs.
We are pursuing the Digital New Deal to spearhead a forward-looking innovative economy. We will push ahead with the accelerated transition to a digital economy by extensively digitalizing the national infrastructure while fostering the D.N.A (data, network and AI) ecosystem and non-face-to-face industries.
The Government will pave the way toward sustainable growth through the Green New Deal. We will create new markets, industries and jobs while actively responding to climate change as a responsible member of the international community.
In essence, both the Digital New Deal and Green New Deal are designed for people. We will increase investment in people for an inclusive digital economy, for instance, by fostering professionals and providing training for new jobs as well as offering employment related support – all while extensively expanding the employment safety net, including laying the foundation for universal employment insurance.
The Korean New Deal contained in the 3rd supplementary budget proposal is only the beginning. It will be a project that continuously evolves and develops while consistently identifying new ventures and significantly expanding the amount of investment. When the master plan is released in July, we will brief the people on the concrete initiatives to be achieved by the end of my Administration, along with the long-term and comprehensive big pictures.
The Government will strongly push ahead with existing innovative growth strategies in order to move toward a pace-setting economy in the post-COVID-19 era. We will develop Korea’s infectious disease prevention and control industry into a driving force for exports and nurture the three new industries – biohealth, system semiconductors and future cars – as future growth engines for our economy. Making the most of the international community’s favorable recognition of our country as a safe investment destination and of its innovative capabilities, the Government will provide full support for the reshoring of Korean companies and attracting high-tech industries from overseas.
Establishing the foundation for a pace-setting economy requires bold innovation in our industrial and economic structures. We will build an ecosystem where business ventures and startups become the main players of a digital economy, and we will improve the competitiveness of flagship industries through manufacturing innovation and “smartization.” We will also accelerate innovation in service industries along with tangible regulatory innovation. We will pave the way for a new Republic of Korea with a pace-setting economy by turning the current crisis into an opportunity for innovation.