Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, stated on July 14 that "we must prepare a strong ship to cross the distant sea when the favorable winds blow," emphasizing his commitment to making this year a foundational year for a significant economic leap. His plan aims to transform the current growth momentum, driven by a semiconductor boom and strong exports, into a rebound in the potential growth rate.
During a joint briefing on the '2026 Economic Growth Strategy for the Second Half of the Year' held at the Government Sejong Center, Koo noted, "Our economy is accelerating due to a swift response to the Middle East conflict and unprecedented export performance."
The government projects that the real growth rate will reach 3.0% this year, the highest in five years. The growth rate closely tied to citizens' lives is expected to hit 12.3%, the highest in 30 years. Per capita income is nearing $40,000, and the national debt ratio is anticipated to fall to the 40% range.
Koo remarked, "The virtuous cycle of growth and finance is becoming visible," calling it a valuable achievement created by the collaboration of citizens, businesses, and the government.
However, he stressed that "we cannot be complacent with the current positive trend." He added, "Whether we let this boom remain a temporary achievement or turn it into a new growth trajectory for the South Korean economy depends on our choices and responses now."
The government has introduced a vision for the second half of the year, termed the 3-4-5 vision, which aims for a potential growth rate of 3%, becoming the world's fourth-largest exporter, and achieving a per capita income of $50,000. This initiative seeks to elevate South Korea to an 'irreplaceable' status on the global stage.
To achieve these goals, the strategy includes three main areas and six key tasks: responding to the post-Middle East conflict, rebounding the potential growth rate, and addressing structural issues. The government plans to manage economic risks related to rising prices, interest rates, and exchange rate volatility, while also reducing external dependencies on supply chains and energy highlighted by the Middle East conflict.
Koo indicated that additional tax revenue expected from the semiconductor boom will be focused on investments in youth, next-generation growth, local development, and education through the establishment of a future response fund. He also mentioned plans to manage risks related to prices, exchange rates, and interest rates by appropriately operating the maximum price of petroleum products, supporting small businesses burdened by high exchange rates, and expanding low-interest policy financing.
To rebound the potential growth rate, the government plans to expedite three mega-projects: semiconductors, artificial intelligence (AI) data centers, and physical AI. Koo stated, "Above all, we will focus all efforts on the swift promotion of the three mega-projects: semiconductors, AI data centers, and physical AI."
For domestic and international strategic investments, the government will expand the Korea Investment Corporation (KIC) into a comprehensive sovereign wealth fund and create an ultra-innovative economy fund within the National Growth Fund to increase investments in ultra-innovative companies.
Additionally, to ensure that local areas contribute to the rebound in potential growth rates, the government plans to select growth engines for the 5 regions and 3 special areas by the third quarter and push for the enactment of special laws for mega-special zones. The second phase of the public institution relocation plan, aimed at redistributing national functions concentrated in the capital region, will also proceed without delay.
Koo identified overcoming K-shaped polarization as a key structural issue to address. He stated, "We will proactively respond to the employment changes resulting from the AI transition," pledging to train over 200,000 young professionals, create more than 300,000 jobs and startups, launch youth-targeted Individual Savings Accounts (ISAs), and prioritize the supply of new types of public rental housing for young people.
* This article has been translated by AI.
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