Finance minister holds overseas roadshow on S. Korean economy

SEOUL, Oct. 17 (Yonhap) -- South Korea's finance minister held an overseas roadshow on the country's economy to some 100 investors in New York amid growing uncertainties about Asia's fourth-biggest economy. Hong Nam-ki held an investor relations session on Wednesday (local time) to explain the current status quo of the South Korean economy and answer questions from some 100 investment bank officials and asset managers at the St. Regis New York hotel. Participants showed interest in the Korean government's labor-friendly policies, monetary policies, ways to tackle slowing exports, its view on deflation worries and inter-Korean economic cooperation. As for Seoul's will to continue to keep its labor-friendly policies represented by recent hikes in the minimum wage, Hong said, "the government's labor policies are heading in the right direction in the past two years but couldn't keep pace with companies and the markets." In particular, there will be some supplementary measures to allow small businesses with a workforce of less than 300 to take time in adopting the 52-hour workweek system and sharply raising minimum wages, the minister said. The government is considering giving "some flexibility" to small businesses as the shortened workweek program restricts their operations and growth, he said. South Korea raised its minimum wage 16.4 percent in 2018 and 10.9 percent this year, a sharp hike that critics say has increased the burdens on businesses, especially microbusiness owners and the self-employed. Thomas Byrne, president of the Korea Society, asked about the possibility of Korea entering a deflation given the country's record-low consumer price level. "Korea's consumer prices are expected to stay at the mid-0 percent range this year and at the lower end of 1 percent next year given all conditions. We remain wary about a deflation, but it is hard to agree on the view Korea has entered deflation or faces it," Hong said. In September, South Korea's consumer prices fell 0.4 percent from a year earlier, marking the first on-year drop in inflation since Statistics Korea began compiling related data in 1965. Bank of Korea Governor Lee Ju-yeol said Wednesday that the low inflation was mainly affected by a surge in prices of agricultural products last year due to a base effect. Many, however, are concerned about possible deflation in Korea, citing that the rise in its consumer prices has remained well below the long-term target of 2 percent for years. As for measures to revive slowing exports, the minister said the government will provide a "policy support" to exporters in diversifying their markets. Sharp declines in semiconductors and lower demand from China have dealt a blow to Korean exports, he added. To ride out headwinds and support growth, the central bank lowered its policy rate by a quarter percentage point to 1.25 percent. It is in line with the "policy mix" recommended by the International Monetary Fund and the Organization for Economic Co-operation and Development, Hong said. The policy mix is the combination of a country's monetary policy and fiscal policy. "Together with monetary easing, the government plans to expand fiscal spending to support growth by executing some of its planned annual budget from early next year," he said. In August, South Korea announced a record 513.5 trillion-won (US$424 billion) budget for 2020, up 9.3 percent from a year earlier. kyongae.choi@yna.co.kr (END)