By Joori Roh

SEOUL (Reuters – South Korea believes the economy will grow steadily by 2022 as exports rise and domestic demand recovers. However, it said that fiscal stimulus would be continued to accelerate recovery.

In its bi-annual economic report, the finance ministry updated its 2021 growth outlook slightly but revised it slightly to improve its 2022 economic outlook.

According to the finance ministry, gross domestic product (GDP) is forecast to grow by 3.1% this year, as opposed to 3.0% in previous years. According to the finance ministry, 4.0% growth is expected for the economy this year. This compares to 4.2% in previous forecasts.

“We anticipate the economy will sustain steady growth in 2022.” “The economic normalization will accelerate thanks to an even increase in domestic demand, exports, and vice finance minister Lee Eogwon spoke at an embargoed press conference Friday.

The Bank of Korea data for October showed that South Korea’s economy expanded at a slower pace than anticipated in the third quarter. This was due to weaker domestic demand as well as construction and investment projects.

But consumption is expected to rebound after the government eased coronavirus restrictions last month https://www.reuters.com/world/asia-pacific/skorea-loosens-restrictions-first-step-toward-living-with-covid-19-2021-10-29, though South Korea reinstated stricter social distancing rules on Saturday, clouding the outlook.

Finance ministry forecasts that private consumption will grow by 3.8% and exports will rise 2.0% to record levels of $656.0 billion in 2022. The exports of Korea are expected to rise 25% in 2021 after bouncing back strongly from last year’s pandemic-induced slump. They were driven by the post-lockdown recovery in key markets which drove up demand for Korean petrochemical and Korean chips.

According to the vice finance minister, major threats remain for South Korea’s growth prospects, including the spread of Omicron, disruptions in supply chains, and rising household debt.

The ministry stated that the government will spend 63% ($510.77 million) of the record 607.7 trillion won annual budget for the first half 2022. However, it plans to reduce the number of financial assistance measures used in times of pandemics.

According to the ministry, this includes the closure of the special-purpose vehicle that was created by the central bank and government for purchasing low-rated corporate bonds.

It also stated it plans to create at least 1.06million new jobs in 2022 for youth, elderly and persons with disabilities.

The finance ministry also stated that it would completely overhaul the foreign currency transaction system in order to make it easier for foreign traders to access its currency market. This is part of the MSCI developed markets index. They did not offer any more details.

($1 = 1,189.7700 won)