2023 Korea Trends: Economic Outlook for the Second Half
2023 Korea Trends: Economic Outlook for the Second Half
  • Kim Tae-eun
  • 승인 2023.09.22 12:43
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Many changes are taking place in 2023. Among them, ST looked at the financial aspect of institutional changes. The financial and economic sectors are difficult for college students to access. If it is related to laws or systems, it will feel even more difficult. Let’s read an article that explains these things easily, so you will know more about finance. ......Ed

     The government convened the 18th Emergency Economic Livelihood Meeting and announced the economic policy direction for the second half of 2023 last July 4th, 2023. In this ever-changing modern society, examining the key points of these economic policies prepares us for the future and advances us. Of course, economic terms can sometimes be unfamiliar and challenging, but if we try to read and understand the basic concepts of economics step by step, we can naturally upgrade our economic common sense.

1. Inflation

     In 2022, the global inflation surge made the economic situation more challenging not only for Korea but for the entire world. In 2023, however, the situation seems to have shifted. The consumer price inflation rate has declined to the 2% for the first time in 21 months since September 2021. Recently, the government has mentioned the decline in international wheat prices and urged the food industry to lower prices. Following this, the ramen industry has attempted to lower prices; subsequently, the bakery industries have joined. However, some argue that the industry could have prepared countermeasures, such as initially setting higher prices for their products, so that the resulting losses might be passed on to consumers.

     Hence, the government has announced plans to continue stabilizing prices for essential items to establish a price stability trend. The government aims to minimize the burden of public utility charges and absorb cost burdens through productivity improvement, among other measures, to achieve such a plan. Additionally, to restrain local fee increases, it will allocate general subsidies and special grants differently, according to each local government, reflecting their performance in the first half and their plans for the second half. Ultimately, this plan responds to criticisms that the government fails to control the increase in public utility charges while trying to control the price of ramen.

     The extension of reduced agricultural product purchase tax for individual small-scale restaurants in the food and dining sectors will be extended for a certain period. Also, support for establishments with fair prices and funding for fostering dining establishments will continue. Lastly, efforts to ensure supply stability in the agriculture, livestock, and fisheries sectors will be expanded through storage, contract cultivation, and allocation of customs duties.

2. Tourism Activation

     To continue the recovery of local consumption in the second half of the year, the government plans to strengthen policy support for converting the demand for overseas tourism into domestic regional tourism. The specific support policies are as follows:

     ➊ Support for Domestic Tourism: Provide discounts on KTX (Korea Train Express) and SRT (Super Rapid Train) with accommodation in cities specializing in nighttime tourism, expand railway products that pass through cities of specialization, and operate city circular shuttle buses. Support approximately 300,000 accommodation coupons for the off- peak season in November.

     ➋ Operation of Short-term Regional Travel Programs: Provide affordable regional travel programs on weekends with travel during the last weekend of each month. Operate a special feature page ‘Travel Throughout Korea’ on weekends, allowing touriststoenjoydomestictravel.

     ➌ Expanding Tourism Demand: Expand areas where domestic sharing accommodations are allowed through regulating sandbox special exemption. Attract tourists by launching customized tourism products for pet-friendly tourism.

3. Special Law on Jeonse Fraud

     In the first half of 2023, there have already been three suicide cases due to the fraudulent practices of a person known as the ‘Construction King’ in Incheon. In response, the ruling party announced the Special Law on ‘Jeonse’ (long-term rental deposit) Fraud on April 25, 2023 to aid the victims of such fraud. Jeonse fraud occurs when landlords, after making excessive investments and running out of money, fail to return the deposit to tenants. This leads tenants to highly possibility of losing their deposit and facing eviction if the house is auctioned off. The Special Law on Jeonse Fraud aims to assist victims in such situations. The contents of the Special Law on Jeonse Fraud are as follows:

     However, some of the public criticism revolves around the fact that people initially cannot afford to buy houses, and they still will not be able to recover the deposit fundamentally. Starting from the end of September, information about landlords who have rented out multiple properties and frequently failed to return the deposits will be available on the website of the Ministry of Land, Infrastructure and Transport. The landlords’ names, ages, addresses, and the amounts of unrecovered deposits will also be included.

4. Expansion of Cultural Expense Income Deduction

     Cultural Expense Income Deduction is a system that allows workers to receive an annual deduction of up to 3 million won for expenses incurred on items such as books, concert tickets, museum visits, art gallery admissions, and newspaper subscriptions using credit cards. Previously, it only applied to expenses related to books, concerts, museums, art galleries, and newspaper subscriptions, but starting July 1st, people will also be able to get the deduction for movie tickets. Mr. Lee Chang-moo, the chairman of the Korean Film Development Association, said, “The introduction of income deductions for movie tickets will not only revitalize the domestic film industry, which has been affected by COVID-19 but also help reduce the burden of movie tickets expenses for the public.”

     Have you heard of the ‘Financial Literacy Survey’? The Bank of Korea and the Financial Supervisory Service measure the financial literacy of Korean adults biannually to compare the results with other countries and establish directions for financial education in the country. According to the ‘2022 Financial Literacy Survey,’ South Korea scored 3.1 points higher than the average in financial literacy, but it remains uncertain to claim that South Korea has high financial literacy due to this financial polarization. Hence, it is still necessary to make rational judgments about finance as independent individuals, so grasping the flow of finance and directly seeking economic policy briefs are needed.

     “Illiteracy makes life uncomfortable, but ‘financial illiteracy’ is even more frightening as it renders survival impossible, making it scarier than illiteracy.” – Alan Greenspan

Kim Tae-eun (Planning Editor)


Yoo Tae-yeon (ST Cub-Reporter)


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