[Aju News DB]
South Korea will increase fiscal spending in the first quarter and extend a tax cut program on passenger cars to help lift a fragile economy, the finance ministry said Wednesday.
The government will boost public spending by 6 trillion won ($4.94 billion) and lending by policy banks by 15.5 trillion won, both during the first quarter and compared with previous plans.
It will also extend a consumption tax cut program on passenger cars, which set to finish at the end of December, to June to bolster domestic demand.
The government cut special excise taxes on cars to 3.5 percent from 5 percent under the program introduced in August last year, which helped to fuel private consumption in the second half of last year.
The economic stimulus measures are designed to keep Asia's fourth-largest economy on a recovery track in the face of falling oil prices and tumbling demand from China and other major economies.
"Our economy has been recovering on the back of consumption since late last year, but economic conditions have been worsening more than expected since the start of the year while the slump in exports is deepening," said Finance Minister Yoo Il-ho during a meeting with other government ministers.
The latest measures will help lift economic growth for the January-March period by 0.2 percentage points on a quarter-on-quarter basis, the ministry said. .
South Korea’s exports plunged 18.5 percent in January from a year earlier, the largest on-year drop in more than six years, while its consumer prices grew less than 1 percent last month for the first time in three months
Alex Lee
reporter
Park Sae-jin
swatchsjp@ajunews.com
