While the so-called Choi-led economy team under the Park Geun-hye administration has begun, the attention has focused on whether Choi Kyung-hwan, new Finance Minister and Deputy Prime Minister for Economic Affairs, is able to Korea recover from its recent economic downturn.
Mr. Choi mentioned the three traps the Korean economy has faced in his inauguration speech: the trap of low growth, reduced balance, and no results. Previously, he said in a hearing at the National Assembly Strategy and Finance Committee that all necessary fiscal, monetary, and credit measures would be used to boost the economy.
“No summer dresses for the freezing real estate market”
He said “the property market regulations that are supposed to be designed for ordinary people are actually hurting those relevant to the market. Expansionary macroeconomic measures, therefore, need to be taken until the economy and consumption is spurred and the old regulations not suitable for the current condition should immediately be removed.”
He emphasized, “There should be more corporate activities for more income. We need to dramatically reform the unnecessary regulations and encourage corporations to aggressively find new investment opportunities in, for example, the service sector.”
Also, he added, “The economy in which the virtuous circle that corporate outcomes leads to household consumptions will get better.” That means efforts will be made for both growth and distribution.
Expectations on the so-called 'Choi Kyung-hwan effect' are high as he is appointed as the new economy leader who should help the Korean economy out of the trap of the low growth since the recent, long economic depression and Sewol ferry incident.
Accordingly, a positive sign in the real estate market has already been detected. The market experts say that the Gangnam area of Seoul starts to show some signs of growth as loan-to-value (LTV) and debt-to-income (DTI) rations are eased and taxes on rental income is also partially removed since his inauguration.
The high hopes on Mr. Choi's stimulus measures resulted in rising transactions in the Gangnam area, an actual barometer to measure real estate businesses, and some positive signs in housing reconstruction projects.
The Mr. Choi-led team has announced it will increase both consumption and investment in the midst of the economic slowdown. The die has been cast. A lot more attentions will be paid on its solution for the Korean economy.