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By Koh Byung-joon
SEJONG, March 28 (Yonhap) -- South Korea's economy will likely grow 2.3 percent in 2013 from a year earlier, the government forecast Thursday, sharply revising down its earlier outlook due to toughened market conditions at home and abroad.
The government also said that it will push for an extra budget in order to prop up the economy which is showing signs of losing its recovery momentum.
The latest growth projection is lower than a 3 percent growth predicted in December when the finance ministry unveiled its economy-management plans for 2013.
"Our economy has lost much of its vitality as the unprecedented low growth has continued for nearly two years and conditions down the road are not favorable either," Finance Minister Hyun Oh-seok said during a press conference held in Seoul.
"Dangerous hidden bumps are still lurking here and there with little chance that exports are bouncing back significantly...We revised down the growth rate from 3 percent to 2.3 percent in consideration of the delayed economic recovery at home and abroad and worsening fiscal conditions," he added.
The downgrade comes as many see the December outlooks as too optimistic given the current economic conditions. Major think tanks and research institutes have already slashed their growth projections for this year to the 2 percent range.
The government cited a continued slump in consumption and investment as major reasons behind its move to cut the growth outlook.
"Consumption and investment remain in a slump and there are few signs that they are bouncing back any time soon," the finance ministry said in a press release.
A slowing economy is also taking its toll on employment, forcing the government to revise down its job creation outlook. The ministry cut its job creation outlook from 320,000 to 250,000.
As pessimism spreads that the economic conditions could change for the worse, the ministry said that it will push to craft a supplementary budget for this year. A related plan will be finalized next month.
"To make up for a decline in tax revenues caused by the economic slowdown, we will seek an additional budget in the middle of April to help boost the overall economy trend and stabilize the livelihoods of people," said Hyun, who concurrently serves as deputy prime minister in charge of economic affairs.
He did not specify any figures regarding the plan. Market watchers said that the size of an additional budget may well go beyond 6 trillion won given the tax shortfalls estimated for this year. Some speculated that the government will come up with a budget exceeding around 10 trillion won.
This would mark the first supplementary budget in four years. South Korea has not put forth an extra budget since 2009 when it crafted 28.4 trillion won worth of additional spending in a bid to tide over the global financial crisis.
Meanwhile, touching on the longer-term plans for raising money needed to carry out campaign pledges of the new government, the ministry said it has to secure about 134.5 trillion won.
To meet the financial demand, the ministry said that it will increase tax revenues by 53 trillion won over the next five years by removing soon-to-be-expired tax exemption and reduction programs.
On the spending front, the ministry said that it will save a total of 81.5 trillion won by streamlining the overall spending structure.
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