Finance minister, central bank chief vow coordinated policy efforts to tackle uncertainties

By Yonhap
  • Published : Dec 19, 2018 - 14:22
  • Updated : Dec 19, 2018 - 14:22

South Korea's new finance minister and the central bank chief on Wednesday vowed to make concerted efforts to tackle uncertainties and bolster the economy next year.

"It doesn't seem that the economy will worsen next year, but we can't let our guard down as there are downside risks out there," Bank of Korea Gov. Lee Ju-yeol said before holding a luncheon meeting with the country's newly inaugurated Finance Minister Hong Nam-ki. "The BOK and the finance minister will cooperate on managing economic policies."

Bank of Korea Gov. Lee Ju-yeol. (Yonhap)

The Lee-Hong meeting was their first face-to-face meeting since Hong took office last week.

The meeting came just a day before the US Federal Reserve is widely expected to raise its key interest rate by a quarter of a percentage point to a target range of 2.25-2.50 percent.

The minister and the central bank chief said that they share the same view on the current economic situation facing the country.

They cited mounting household debt, sluggish employment and escalating uncertainties over US-China trade disputes and the Fed's monetary normalization as downside risks.

The government and the central bank will use a "policy mix" -- a combination of fiscal and monetary policies -- to prop up the economy and create more jobs.

"The government is determined to run expansionary fiscal policy next year," said Hong. "To jumpstart the economy, both fiscal and monetary policies have to play a role."

Asia's fourth-largest economy is expected to grow 2.7 percent this year, but the pace will likely slow down to around 2.5-2.6 percent next year.

The BOK anticipated that the Korean economy will pull off 2.7 percent growth for next year, while the finance ministry cut its 2019 growth target by 0.2-0.3 percentage point to 2.6-2.7 percent this week.

Many private institutions and think tanks have forecast that the South Korean economy will grow 2.3-2.6 percent in 2019. (Yonhap)