South Korea’s president Park Geun Hye appointed Hyun Oh Seok as finance minister, paving the way for stimulus measures within days to boost growth in Asia’s fourth-biggest economy.
“We need to use all possible policy measures to speed the economic recovery,” Hyun, 62, said in an e-mailed speech after his appointment. “We need to come up with measures to revitalize the economy in March,” he said, adding that policy makers need to gain the people’s trust.
Pressing on with Hyun’s appointment in the face of objections from opposition lawmakers may bring forward measures that Park hopes will spur the economy after growth last year was the weakest since the global financial crisis. Challenges include a stagnant property market, an aging population, and weakness in the yen that aids export competitors in Japan.
“Hyun becoming finance chief is likely to speed up preparation for a stimulus package, given that Hyun shares the view that a policy boost is needed,” said Kim Hyeon Wook, an economist at SK Research Institute who has worked under Hyun.
The Kospi Index fell 0.1 percent today as Cyprus struggled to avoid a financial collapse. Park reappointed Defense Minister Kim Kwan Jin. Her preferred nominee for defense chief, Kim Byung Kwan, withdrew his candidacy, the Chosun Ilbo newspaper reported earlier.
Hyun was president of the state research center Korea Development Institute, which was founded by Park’s father, former dictator Park Chung Hee. He has a Ph.D. in economics from the University of Pennsylvania and previously worked at the World Bank, as well as South Korea’s finance ministry.
The government may announce a supplementary budget of 10 trillion won ($8.9 billion) on March 26, Yonhap News reported this week, without saying where it got the information. Choi Sang Mok, a director general at the finance ministry, said no decision had been made.
Delays in filling the finance minister slot have been costly because consumers and companies are delaying spending until they see the new government’s stance, said Kong Dong Rak, a fixed-income analyst at Hanwha Investment & Securities Co. in Seoul. “It’s a great loss to our economy to have the economic-policy control tower empty for nearly a month,” Kong said.
South Korean officials aim to get the nation closer to a potential growth rate estimated by central bank Governor Kim Choong Soo at 3.8 percent, after last year’s 2 percent expansion was the weakest since 2009.
“Hyun will need to announce at least 20 trillion won of supplementary spending to achieve growth of about 3 percent this year,” Lee Chul Hee, chief economist at Tongyang Securities Inc. said by phone in Seoul.