South Korea's finance ministry plans to propose the most expansionary spending plan since the global financial crisis for 2020 in a bid to buoy economic growth amid a global economic slowdown and trade tensions with Japan, according to the Financial Times.
The budget, which awaits parliamentary approval, is set at 513.5 trillion South Korean won, reflecting an 8% increase over 2019's spending plan including a 2019 supplementary budget, the finance ministry reportedly said.
The plan primarily focuses spending on job creation, welfare expansion and development of areas considered conducive to stimulating growth, according to the report.
The export-reliant country has seen exports decline for eight consecutive months amid falling global demand and lower prices for memory chips, which are considered South Korea's biggest export item, the newspaper noted.
Besides the tensions from the U.S.-China trade war, South Korea faces stricter trade regulations from Japan over exports of materials considered essential to South Korea's high-tech industries.
Earlier this month, Japan's Cabinet approved the revocation of South Korea's status as a favored trading partner as tensions between the two countries over wartime forced labor continue. South Korea retaliated by removing Japan from its list of trusted partners.
The spending plan will include a proposal for a 17.3% rise in expenditure dedicated to research and development in a bid to finance the creation of important materials and parts industries along with facilitating investments in such initiatives as artificial intelligence, bio-health services and 5G networks, according to the report.
It would be challenging for the government to deliver on its planned growth target of 2.4% to 2.5% in 2019 amid unfavorable economic conditions, South Korean Finance Minister Hong Nam-ki reportedly said.
As of Aug. 28, US$1 was equivalent to 1,213.21 South Korean won.
