In a situation where external economic uncertainty is increasing, such as the intensifying conflict in the Middle East and the U.S. presidential election, government ministries are preparing preparedness measures. In the photo, candidate Harris (left) and candidate Trump are gesturing to supporters at a campaign rally.[사진=EPA 연합뉴스]
Major countries have shifted to easing the high interest rate policies they have maintained to manage liquidity released due to the COVID-19 pandemic, but the economic outlook is uncertain due to the unstable situation in the Middle East, including the US presidential election that is just 15 days away. Ahead of a crossroads in which our economy could take a new leap forward next year or fall into a swamp of mid- to long-term low growth, the government decided to receive external ‘consulting’ to prepare for uncertain internal and external economic conditions.
According to the Ministry of Trade, Industry and Energy on the 21st, the Ministry of Trade, Industry and Energy has ordered a research service for ‘Economic Analysis and Industrial Competitiveness Strengthening Plan for 2025’. The project budget is 55 million won and the project period is 2 months from the date of signing the contract.
The main tasks consist of △analyzing the current domestic and foreign economic status and outlook for 2025, △listening to expert opinions, investigating industrial site requirements, and △drawing current issues and tasks in the industry, trade, and energy sectors. The agency performing the service must compare and analyze the 2025 economic forecasts of major institutions such as the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD), and the Bank of Korea, and diagnose the domestic economic situation to derive next year’s economic forecast.
The Ministry of Trade, Industry and Energy plans to discover and specify new policy tasks for 2025 in the industry, trade and resources field through research services.
An official from the Ministry of Trade, Industry and Energy explained, “We will create synergy effects by establishing integrated policies in the industry, trade, and energy sectors and develop effective policies that reflect the needs of companies and industrial sites.”
There are also busy efforts to overcome the sluggish domestic demand that is holding back growth. The Bank of Korea’s Monetary Policy Committee held a monetary policy direction meeting on the 11th and adjusted the base interest rate to 3.25%, 0.25 percentage points lower than the current (3.50%). Although this is the first pivot (monetary policy shift) in three years and two months, the Bank of Korea’s concerns appear to be deep.
The Bank of Korea released a monetary and credit policy report last month and diagnosed that the recovery of private consumption, a key sector of domestic demand, is being delayed due to the continued high inflation and high interest rates. In addition, in a situation where household loans have increased significantly, the burden of principal and interest repayment due to high interest rates was also seen as a factor limiting the improvement of consumption capacity.
The Ministry of Strategy and Finance is also expressing concerns about external economic changes. Choi Sang-mok, Deputy Prime Minister and Minister of Strategy and Finance, recently held a meeting of foreign economic ministers and emphasized that concerns about uncertainty in American politics are growing and that a plan to respond to technology outflows must be prepared to strengthen industrial competitiveness.
Deputy Prime Minister Choi said, “With the U.S. presidential election approaching in 20 days and the conflict in the Middle East region likely to expand, external uncertainty and geopolitical tensions continue. We will use big data to build a prevention system and protect small and medium-sized businesses that are vulnerable to technology protection.” “We will support the class to respond proactively,” he said.
Reporter Information Kim Yu-jin [email protected]
