Korea will front-load 68 percent of spending in its 2016 budget, as Asia’s fourth-largest economy is expected to grow slower next year amid bleak global trade outlook, the Finance Ministry said Tuesday.
According to the plan, endorsed at a Cabinet meeting earlier in the day, the government will aim to complete 40.1 percent of expenditure for public projects earmarked in the budget by the end of March, worth 128 trillion won ($108.7 billion), and 68 percent, or 224 trillion won, by the end of June. Total spending planned for the entire year is 330.6 trillion won.
A front-loaded budget is a typical pump-priming tactic that has been used by the Korean government for many years now. This year, the government had allotted the same 68 percent of the year’s budget in the first six months, while 58.6 percent was actually executed.
Tuesday’s announcement comes as the country braces for slower growth in 2016 amid flagging exports, still-weak domestic demand and increased uncertainties in the global environment, such as with oil prices, an expected U.S. rate hike and a slowdown in China.
The ministry has downgraded next year’s GDP growth forecast from 3.5 percent to 3.3 percent in September and cut its estimate for 2015 from 3.8 percent to 3.1 percent. The Bank of Korea expects a growth of just 2.7 percent this year.
“Money to be used in the first half will be used to create more jobs, stabilize the livelihoods of lower-income households and reinvigorate the domestic economy,” the ministry said in a statement.
It also noted that 1.1 percent of the 2016 spending, or some 3.5 trillion won, has been allocated for use even before the end of this year in order to bankroll a select number of urgent projects.
By Lee Sun-young