Ministry of Strategy and Finance of Republic o : Government to Focus on Korea-US Economic Issues and Boosting Overseas Infrastructure Projects

189 Ministerial Meeting on International Economic Affairs

Government to Focus on Korea-U.S. Economic Issues and

Boosting Overseas Infrastructure Projects

Deputy Prime Minister Yoo Il Ho presided over this year's first Ministerial Meeting on International Economic Affairs on January 4. The meeting focused on the recent trends and activities in major economies since the U.S. presidential election last year and their policy implications, as well as the measures to increase support for the infrastructure industry and boost overseas infrastructure projects.

Current Economic Situation

The global economy is expected to see moderate growth and increasing trade this year, although there will continue to be a significant level of uncertainty.

With the new U.S. administration set to take office on January 20 and the possibility of Fed's additional rate hikes throughout the year, there are numerous uncertainties coming from abroad this year. As such, the government will closely monitor and manage overseas risk factors and attempt to find new opportunities amid uncertainties.

Major countries, including China, Japan and the EU, have reacted perceptively to the Trump administration's policy proposals, particularly on the issues that are directly linked to their national interests. Through inter-ministerial efforts, the Korean government has also been closely engaging in and will continue to maintain active communication with both the outgoing and incoming U.S. administrations.

Furthermore, the government will promptly respond to the changes taking place in the global infrastructure market and boost its support for infrastructure firms in order to help them gain access in overseas markets and stimulate domestic economy. A comprehensive and amplified measure of support will be adopted, incorporating inputs from both public and private sector experts, increasing financial support, helping companies gain access in the U.S. infrastructure market, utilizing the AIIB annual meeting as a venue for opportunity, and switching to high value-added investment and development sectors, among others.

Post-U.S. Presidential Election Trends in Major Economies and Their Policy Implications

Deputy Prime Minister Yoo stated that with the inauguration of the Trump administration just around the corner, major countries have demonstrated their concerns about the possibility of protectionist trade policy from the new U.S. government, and have been devising and strengthening strategies according to their core interests and related issue areas.

In order to build a strong economic relationship with the Trump administration, the Korean government, too, will continue to act promptly to communicate and cooperate with both the outgoing and incoming administrations in the U.S.

Next week, Deputy Prime Minister Yoo will attend an investors' relations (IR) meeting in New York (from January 9) where he will meet with foreign investors and media, and have a chance to discuss the current economic situation in Korea and our policies going forward. The IR meeting is expected to serve as a venue for addressing questions and elucidating some of the misunderstandings about the Korean economy.

Deputy Prime Minister Yoo emphasized that the ministries and agencies in the Korean government will continue to keep in close contact with their counterparts in both the current and incoming U.S. administrations. For instance, the Ministry of Foreign Affairs will hold a high-level consultative meeting with the U.S. Defense Department in Washington, DC, and the Ministry of Trade, Industry and Energy is scheduled to hold a Korea-U.S. FTA Joint Commission with the U.S. Trade Representative in Seoul on January 12.

Measures to Boost Overseas Infrastructure Projects

In order to help stimulate Korea's economy this year, the government will initiate a comprehensive policy measure increasing support for the infrastructure industry and helping firms gain access overseas. Deputy Prime Minister Yoo stated that this particular policy has been discussed during the first ministerial meeting hosted by Acting President Hwang Kyo-ahn on January 2, and that it is certain to generate many success cases this year that can help turn Korea's slowing economic trend around.

Deputy Prime Minister Yoo designated major bilateral economic cooperation projects, large scale industries and those that have substantial forward/backward linkages as the target businesses requiring close management and increased support for overseas projects. These issues and other overseas infrastructure project-related matters will continue to be reviewed closely on a regular basis during various high-level official meetings and ministerial meetings throughout the year.

To assist firms better cope with the financing problems, the government intends to increase the pool of financial sources available through various mechanisms (e.g. the Economic Development Cooperation Fund) by 2.2 trillion won to a total of 10 trillion won.

Moreover, the government plans to develop strategies to target infrastructure markets in the U.S. and Asia, taking advantage of the Trump administration's $1 trillion infrastructure investment plan and the AIIB's annual meeting scheduled to be held in Jeju Island this June.

Please refer to the attached PDF file