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 defend against the economic slowdown as much as possible by boosting domestic demand in a situation where consumption contraction is deepening due to high interest rates and high prices. It seems that the focus of the stimulus package will be on ‘tourism revitalization’.
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. It is the first time that the Yoon Seok-Yeol administration, which put forward a fiscal austerity policy, is reviewing 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 due to the side effects of the oligopoly system with high prices and high interest rates.”
The reason why the government started reviewing the domestic demand stimulus plan is that even domestic demand, which will support the economy, is shaking amid the recent sluggish exports. The government plans to come up with countermeasures to boost domestic demand as the slowdown in domestic demand could lead to contraction in employment in all directions, further aggravating the economic slump.
In fact, private consumption growth this year is expected to slow considerably 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 rise 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 lowered to 3% last year. Above all, concerns are high that the burden of repayment of the principal and interest on loans, which has risen due to the high level of household debt and the proportion of floating rate loans compared to major countries, will constrain consumption.
At 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 mind that consumption should be further stimulated, and there was an issue with revitalizing domestic demand.” We are working with us because we share such a critical mind.”
It is known that the focus of the domestic stimulus package will be on ‘tourism revitalization’. In addition, △self-employed and small business support measures △real estate transaction activation plans are expected to be discussed additionally.
In May 2020, at the beginning of the outbreak of Corona 19 (COVID-19), the government came up with measures to stimulate tourism as part of a plan to revitalize domestic demand. At that time, the government started to revive domestic demand by extending the travel week from two weeks to one month and providing 1 million lodging discount coupons worth up to 40,000 won. Even after that, in order to boost the vitality of domestic demand, which has been stagnant due to Corona 19, it has supported consumption coupons under the name of ‘Lodging Daejeon’.
In particular, the government invested 56.5 billion won in the name of fall vacation support in November 2021, and it is analyzed that at that time, about 780,000 coupons were issued for 6 weeks, contributing to the promotion of the domestic economy, including sales of 94.4 billion won and travel consumption of 310.8 billion won.
However, the government took a cautious stance, saying that the specific direction and timing of the announcement have not yet been finalized. A government official explained, “This is the stage of collecting ideas that can revive domestic demand in various fields, including related ministries and domestic tourism.”
Deputy Prime Minister Chu also said, “We are currently considering measures related to domestic demand for some (people’s livelihood) difficulties and areas that need (government’s policy support).”
[저작권자 @머니투데이, 무단전재 및 재배포 금지]
