Koo Yoon-chul: "Growth Will Drive Up Inflation and Interest Rates... Strategy to Reshape Economic Structure in Second Half" (Comprehensive)

"Tax Revenues Surge Amid Semiconductor Boom... Ideal Time for Economic Leap"
Focus on Minimizing War Impact and Rebounding Potential Growth Rate

Koo Yoon-chul, Deputy Prime Minister and Minister of Economy and Finance, stated, "If growth improves and tax revenue increases, there is a high possibility that prices and interest rates will rise, and a stronger stock market will result in the effect of currency depreciation." He added, "We will fundamentally transform the economic structure in the second half of the year and establish a growth strategy suited to a new era."

Koo Yoon-chul, Deputy Prime Minister and Minister of Economy and Finance, is speaking at the Emergency Economic Headquarters Meeting, which is also the Economic Ministers and National Startup Era Strategy Meeting and Real Estate-related Ministers Meeting held on the 22nd at the Government Seoul Office in Jongno-gu, Seoul. Photo by Yonhap News Agency

On May 26, Deputy Prime Minister Koo reported the '2026 Second Half Economic Growth Strategy Direction' to President Lee Jae-myung during a cabinet meeting. The Ministry of Economy and Finance announces its economic growth strategy twice a year, and usually unveils the second-half strategy at the end of June. This time, the main points were released in advance at the cabinet meeting.

The Ministry of Economy and Finance projected that the favorable trend in the semiconductor industry, driven by the AI transformation, would continue at least until next year. Accordingly, the ministry views this period of significant increase in tax revenue as a "golden time for a major economic leap." It plans to craft the second-half economic growth strategy centered on minimizing the impact of the Middle East war, rebounding the potential growth rate, and resolving polarization.

As policy objectives, three key areas and six main tasks were proposed. The three areas are: ▲ Post-Middle East war strategy ▲ Rebound in potential growth rate ▲ Response to structural challenges. The six main tasks are: ▲ Minimizing the impact of the Middle East war ▲ Establishing K-supply chain and energy security ▲ Accelerating the AI transformation and super-innovation economy ▲ Strengthening region-led growth ▲ Overcoming polarization and inclusive growth for all ▲ Initiating full-scale structural reforms.

Meanwhile, Deputy Prime Minister Koo assessed the Korean economy in the first half of this year, saying, "After maintaining a recovery trend since the second half of last year, there were concerns that the war might derail this, but our economy has remained resilient despite difficult conditions."

He added, "In particular, the first quarter growth rate was among the highest among OECD countries, and both exports and the stock market are performing very well. At the G7 meeting, Korea received high praise for the oil price cap, fuel tax cuts, and supplementary budget measures."

However, he pointed out, "Exports are concentrated on specific items and mainly in the metropolitan area, so regional economies need to be strengthened." He also noted that "structural policy challenges in the supply chain and energy sectors have come to the forefront."

Deputy Prime Minister Koo plans to finalize and report the second-half economic growth strategy to President Lee at the end of next month after discussions with relevant ministries.

This content was produced with the assistance of AI translation services.