South Korea economic growth to exceed potential rate in 2024, Yoon says

SEOUL (Reuters) – South Korean President Yoon Suk Yeol said on Tuesday economic growth in 2024 would exceed the potential growth rate after accelerating in the second half of 2023, and pledged closer ties with the United States to bolster crisis management capabilities.

The government is closely monitoring the economic and security situations and is prepared to take response measures in a timely manner, Yoon said in a speech to parliament to shore up support for the country’s proposed budget for next year.

“The pace of economic growth will continue to expand in the second half of the year as forecast earlier … and by next year it will recover beyond the level of the potential growth rate and record a higher rate than major countries,” he said.

Gross domestic product (GDP) grew 0.6% in the July-September quarter from three months earlier, data from the Bank of Korea showed last week, the same pace as the prior quarter and beating a median 0.5% increase forecast in a Reuters survey.

In a Reuters survey conducted early this month, South Korea’s economic growth was forecast to slow to 1.2% in 2023 from 2.6% in 2022.

The government in August unveiled its budget plan for next year that included the smallest increase in two decades amid weakening tax revenue due to slower economic growth.

The 656.9 trillion won ($487 billion) government expenditure plan for 2024 was 2.8% higher from 2023.

Yoon again stressed the importance of fiscal discipline as a crucial part of stabilising domestic inflation and sustaining the country’s credit ratings externally.

Yoon highlighted his government’s priority on maintaining security ties with the United States and other allies and said economic security cooperation with Washington could bolster the country’s crisis management capabilities.

South Korea will also maintain mutually beneficial cooperation with China, South Korea’s largest trading partner, Yoon said.

($1 = 1,348.7800 won)

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