South Korean Opposition Leader Proposes $21 Billion Extra Budget
(Bloomberg) -- South Korea's opposition leader Lee Jae-myung proposed compiling an extra budget worth at least 30 trillion won ($21 billion) to prop up the economy strained by political uncertainties and Donald Trump's tariff threats.
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'The government should not miss the golden opportunity for economic recovery through fiscal expansion,' Lee said in a speech in parliament on Monday. 'I propose a minimum of 30 trillion won extra budget to restore people's livelihoods and the economy.'
South Korea's economy barely expanded last quarter from the previous three months as anemic consumption and slackening exports weighed on activity, with political turmoil adding to downward pressure.
The South Korean government is now led by Finance Minster Choi Sang-mok, who took over as acting president after the opposition-controlled parliament impeached President Yoon Suk Yeol and Prime Minister Han Duck-soo successively in the wake of Yoon's December declaration of martial law.
Bank of Korea Governor Rhee Chang-yong told Bloomberg News last week that rate cuts alone cannot sustain growth as he said a supplementary budget of 15 trillion to 20 trillion won would be an appropriate amount to match the economic growth lost due to turmoil resulting from the martial law declaration.
Shoring up growth is a key concern for policymakers keen to show that the government and central bank can continue to run the economy efficiently and respond effectively to changes in US trade policy under Trump even after Yoon was ultimately arrested.
Trump said Sunday he plans to impose 25% tariffs on all imports of steel and aluminum, a move that drove shares of steelmakers including Posco Holdings Inc. lower on Monday.
South Korea is among nations most vulnerable to trade tensions because its manufacturers play a vital role in a wide swathe of global supply chains. Its economic growth softened during Trump's first term when he imposed tariffs on South Korean products including washing machines produced by LG Electronics Co.
Lee, a potential candidate for next presidential election, called for fostering the country's artificial intelligence, bio-technology, culture, defense and renewable energy sectors. He said AI and other advanced technology development should lead to reduced working hours and that South Korea should eventually pursue a four-day work week.
On foreign policy, Lee said Seoul's alliance with Washington is the foundation of the country's diplomacy and security, calling it a critical asset for growth. He also said South Korea should seek to engage with North Korea.
'At a time when President Trump is expressing his willingness for North Korea-US talks, our government should urge North Korea to return to dialogue and make sure we are not sidelined,' Lee said.
--With assistance from Shinhye Kang and Seyoon Kim.
(Adds more comments from Lee)
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