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S. Korea to spend 39 bln USD after lowering 2014 growth outlook to 3.7 pct

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(Globalpost/GlobalPost)

S. Korea to spend 39 bln USD after lowering 2014 growth outlook to 3.7 pct

SEOUL, July 24 (Xinhua) -- South Korea will spend 40.7 trillion won (39 billion U.S. dollars) on fiscal and financial stimulus after lowering its 2014 growth outlook to 3.7 percent from the prior forecast of 4.1 percent, the finance ministry said Thursday.

The Ministry of Strategy and Finance said in a statement that 11.7 trillion won will be spent in the second half on the fiscal enhancement such as housing and credit guarantees for mid-income families and small companies.

State-owned lenders will allocate 10 trillion won in the second half to supporting local companies, and another 16 trillion won will be spent from the second half on financial and foreign exchange stimulus, including support for foreign currency loans and facility investment.

An additional 3 trillion won will be spent from 2015 on stabilizing corporate bond market, the ministry said, noting that it will maintain an "expansionary" macroeconomic policy until the economy is on a stable recovery track.

The economic policy direction for the second half was approved during the economy ministers' meeting chaired by President Park Geun-hye. It was drawn up by the new economic team led by Choi Kyung-hwan, deputy prime minister for economic affairs and finance minister.

The ministry lowered its 2014 growth outlook to 3.7 percent from an earlier estimate of 4.1 percent. The economy was expected to expand 4.0 percent in 2015.

Earlier this month, Bank of Korea (BOK) revised down its growth outlook for 2014 by 0.2 percentage point to 3.8 percent, citing weaker domestic demand after one of the country's worst maritime disasters.

http://www.globalpost.com/dispatch/news/xinhua-news-agency/140723/s-korea-spend-39-bln-usd-after-lowering-2014-growth-outlook-