Finance Minister nominee Yoo Il-ho on Monday expressed confidence in Korea’s economy, saying it will grow 3.1 percent this year, as projected by the government, without resorting to a supplementary budget.

“I think the economy will be able to achieve the 3.1 percent growth, without the help of a supplementary budget,” Yoo told lawmakers during a parliamentary confirmation hearing.

Korea, under the outgoing Finance Minister and Deputy Prime Minister Choi Kyung-hwan, rolled out a 12 trillion won ($9.92 billion) supplementary budget in 2015 and a series of consumption-boosting measures in order to help jump-start the economy. 

Yoo’s remarks Monday struck a notable positive note for Asia’s fourth-largest economy this year, amid heightened caution in markets after China’s stock crash triggered a global market rout.

The Finance Ministry’s 3.1 percent growth prediction, revised down from 3.3 percent in December, is far higher than what most private economists and foreign investment banks forecast.

Asked to make clear his diagnosis of the economy, he said that it was “not in a crisis, but was facing some difficulties.”

“I don’t see the G-2 risk (the U.S. and China) putting a major strain on Korea’s economy in the short term,” he said. “But if risks persist and accumulate, they could have an adverse impact on the economy. We need to guard against (it).”

Job No. 1 for him as the country’s economic head is structural reform, Yoo said, as the country’s potential growth rate could decline amid delays in structural reforms. The Bank of Korea in December said the country’s potential growth rate would remain at 3-3.2 percent for the period between 2015 and 2018.

He also said the country’s foreign currency reserves, standing at $367.9 billion in December, would provide Korea with enough buffer in case of a sudden outflow of foreign capital.

An economist, two-term lawmaker and former transportation minister, Yoo was nominated by President Park Geun-hye on Dec. 21 as part of a Cabinet reshuffle.

Lawmakers will submit a report on his qualification for the post based on results of Monday’s hearing, but it is not legally binding. If appointed, Yoo will return to the Cabinet less than three months after his resignation as transportation minister in November.


By Lee Sun-young
(milaya@heraldcorp.com)