People relax on the beach in Haeundae, Busan, South Korea, November 10, 2023. Photo by Xinhua News Agency reporter Yao Qilin.
A few days ago, South Korea** announced its 2024 gross domestic product (GDP)** value, which is a slight downward revision compared to the value released in July 2023. In 2023, South Korea's economic growth rate will be only 14%, the lowest level in three years. In the face of economic downside risks, South Korea** recently announced a series of response measures.
According to the "Economic Policy Direction for 2024" recently released by the Ministry of Strategy and Finance, South Korea's economic growth rate in 2024 is 22%, which is 02 percentage points. In the second half of 2023, South Korea's exports, mainly semiconductors, showed an upward trend, and have shown positive growth for three consecutive months since October. In this atmosphere, South Korea** still lowered its economic growth forecast, which shows that its concern about economic downside risks is self-evident.
The value of South Korea is basically in line with the expectations of the outside world for the South Korean economy. According to the latest reports released by the International Monetary Fund (IMF) and the Asian Development Bank (ADB), South Korea's economy will grow by 2 percent in 20242%, while the Organisation for Economic Co-operation and Development (OECD) says South Korea's economy will grow by 2 percent in 20243%。But the OECD said South Korea's economic growth momentum was weaker than that of major countries in the world. According to the OECD's Economic Outlook Report released in November 2023, the world economy will grow by 27%, and the economic growth of the G20 countries will reach 28%, which is 04 to 05 percentage points.
South Korea** believes that due to high interest rates, high prices and other reasons, exports that have improved since the second half of 2023 have not been effectively transmitted to domestic demand, and the downward trend of prices has also been delayed, and ordinary people and individual industrial and commercial households have not really felt the improvement of the economy, and even this situation will be difficult to effectively improve in the first half of 2024. Therefore, the recovery of domestic demand and the revitalization of the people's livelihood economy will be given a prominent position, and 75% of the annual budget will be invested in the first half of this year, with a total of 412 trillion won.
South Korea has decided to prioritize the momentum of curbing prices. South Korea's consumer price index (CPI) rose by 6The peak of 3% has since continued to decline, falling to 2. in July 20233%, but has since risen again, staying at around 3% for five consecutive months starting in August 2023. The Ministry of Strategy and Finance plans to invest 10 percent in price management and budget response8 trillion won, an increase of 18 trillion won, aiming to control the CPI at about 2% in the first half of this year.
South Korea believes that the main reason for the recent price ** is fruits, so it plans to exempt or significantly reduce tariffs on 21 imported fruits such as bananas and pineapples, and import 300,000 tons of fruits in the first half of this year. According to the Ministry of Strategy and Finance, in December 2023, South Korea's CPI increased by **3 year-on-year2%, of which, the fruit *** factor accounts for 04%。
South Korea** plans to reduce the burden on the self-employed and small businesses while stabilizing prices. The first is to support 200,000 won per person for 1.26 million small businesses, totaling 252 billion won in electricity billsThe second is to refund part of the interest to self-employed individuals and small businesses who take out loans at higher interest rates such as 5% to 7% per annum, and support the conversion of loans with an annual interest rate of more than 7% to 5 per annumLoans below 5%;The third is to raise the standard of simple taxpayers who can pay less tax on added value, and expand the scope of objects.
In order to invigorate domestic demand, South Korea** decided to increase the income tax reduction rate for personal consumption in the traditional market from 40% to 80% in the first half of this year, and the credit card settlement amount in the first half of the year, which increased by more than 5% compared with last year, will be reduced by an additional 20% in the calculation of income taxIf an older vehicle is replaced, the vehicle purchase tax will be reduced by 70% for a limited timeFor young people working in small and medium-sized enterprises, the rent loan limit will be expanded from 100 million won to 200 million won.
In order to stimulate enterprise investment, South Korea** decided to extend the temporary investment tax reduction and exemption policy for one year, and further increase the tax reduction and exemption share of the increase in enterprise R&D investment, and the reduction and exemption share of large, medium and small enterprises was adjusted to % and 60% respectively.
In order to achieve a soft landing in the real estate project financing market, Korea Land and Housing Corporation is advancing a plan to acquire real estate development projects that are struggling due to temporary financial difficulties.
In addition, in order to stimulate the real estate market, the ** program will still apply preferential treatment to the owner of a single house for home buyers who have one house in a populated area such as Seoul and purchase another house in a population loss area when paying various taxes such as property tax, comprehensive real estate tax, and transfer tax. The goal is to attract people to buy homes in local cities through tax incentives.
Despite the intensive release of economic stimulus policies, Choi Sang-mo, South Korea's Deputy Prime Minister for Economy and Minister of Strategy and Finance, said that in the first half of this year, South Korea's domestic demand is still insufficient compared with exports, and interest rates will be lowered until the second half of the year, and the price decline will still slow down. (Economic ** reporter in Seoul Yang Ming).