The National Assembly Budget Office held Grand Debate on “Diagnosis of the Korean Economy and Response Strategies” on Wednesday, November 1, at 9:30 am in Conference Room 1 of the National Assembly Members’ Building. The debate aimed to assess the current status and challenges of the Korean economy and to discuss potential paths forward.
In his opening remarks, Chief Euysup Cho highlighted the numerous internal and external challenges facing the Korean economy, expressing hope that the debate would generate strategies for the economic recovery and identify new drivers of growth.
National Assembly Speaker Jin-pyo Kim, in his congratulatory speech, emphasized the increased importance of finance in overcoming the severe economic situation and responding to short-term crises. He underlined the necessity of attracting overseas talent and capital to Korea, stimulating financial innovation and mergers and acquisitions to foster ventures and startups, and training military officers to nurture science and technology forces. Sam-seok Seo, chairman of the Special Committee on Budget and Accounts, pledged to incorporate the various diagnoses and prescriptions proposed during the debate into the budget deliberation process. Yoon-jae Hwang, president of the Korea Economic Association, pointed out the vital role of fiscal policy in navigating the current complex crisis, as monetary policy is constrained by high inflation.
The debate was moderated by Chul-in Lee, President of the Korean Association of Public Finance. Ik Jin, NABO’s Assistant Chief for Economic Analysis, stated in his keynote speech that with an expected slowdown in productivity, a contracting labor supply, and lagging income growth, a mix of monetary and fiscal policies is necessary to counter the downturn and cultivate sources of sustainable growth. In the discussion that followed, Deok-hyun Ryu, a professor of economics at Chung-Ang University, argued that expansionary fiscal policy is inevitable to overcome the current recession, highlighting the importance of fiscal investments in future growth foundations and an expanded social safety net to tackle unemployment and worsening income distribution. Myung-ho Park, a professor of economics at Hongik University, noted the difficulty in determining the ideal direction for fiscal policy, advocating for the necessity of welfare expansion and short-term economic recovery measures alongside efficiency initiatives like structural spending reforms, considering foreign creditors and national debt sustainability. Kyung-sik Hong, Director of Monetary Policy Department at the Bank of Korea, advised that for stable medium- to long-term growth, an over-reliance on monetary policy as a means of economic adjustment should be avoided due to its limitations and potential adverse effects. Sang-yeop Sung, President of the Korea Venture Business Association, called for policy support, such as increased tax incentives, to revitalize venture finance, given the contraction of the domestic venture investment market. Ho-jeong Park, a professor of Food and Resource Economics at Korea University, underscored the importance of establishing a sustainable low-carbon industrial environment by securing resources and supporting research and development for critical strategic minerals necessary for the energy transition and to meet the challenges of climate change and new low-carbon trade barriers.
The debate was also live-streamed on the NATV YouTube channel.