In response to the downward pressure on economic growth and external influences, many Asian countries have announced the latest economic adjustment policies, aiming to stimulate the economy and prevent the downward trend from worsening.
South Korea announces large-scale budget
In response to the negative impact of economic growth and the external environment, the South Korean government announced a draft 2020 budget of 513.5 trillion won (1 US dollar equivalent to 1213 won) at the end of August, with a total increase of 9.3% over the previous year. This is the second consecutive year that the Korean government has proposed a budget increase of more than 9% year-on-year. The draft budget has yet to be considered and voted by the Congress.
In this draft budget covering 12 major areas, the “industry, SMEs and energy” sector saw the largest increase, with an increase of 27.5% compared to 2019. Korean media analysts believe that this shows the government’s determination to boost economic vitality. The second largest increase was in the environmental sector, which increased by 19.3% year-on-year. The focus included the government’s plan to establish a fine particle response system.
The Korean government plans to increase its investment in science and technology research and development by 17.3% in 2020, the highest in 10 years. The Korea Ministry of Science, Technology, and Information and Communications said that of the total budget of 24.1 trillion won, 1.7 trillion won will be used to promote the independence of key technology areas in order to cope with external influences such as Japan’s export control measures against Korea; 2.3 trillion won will be used. To strengthen the basic research and development system and cultivate talents such as outstanding engineers and scientists to promote innovation and growth.
In 2020, the Korean government has a budget of 181.6 trillion won in the health, welfare and labor sectors, accounting for the largest proportion of the 12 fields. Among them, the budget for increasing employment was 25.8 trillion won, an increase of 21.3% over the same period last year.
In addition, the total foreign budget is 2.73 trillion, an increase of 11.5% year-on-year, much higher than the 3.9% increase in 2019. The total defense budget is 50.15 trillion won, an increase of 7.4% over 2019. The South Korean Defense Ministry said that about a third of the budget will be used for weapons procurement and other projects to strengthen defense capabilities. South Korean media said that if the draft budget is passed, it will be the first time that South Korea’s defense spending exceeds 50 trillion won.
South Korean Deputy Prime Minister and Minister of Planning and Finance Minister Hong Nanji said at the press conference that it is very difficult for South Korea to achieve economic growth targets due to the global trade situation and external environment. The government hopes to promote the economy to return to the growth track with a proactive fiscal policy.
In the first quarter of this year, the South Korean economy contracted by 0.4% from the previous quarter, the worst performance since the fourth quarter of 2008. Although the economy resumed growth in the second quarter and avoided the “technical recession”, the economic outlook in South Korea is still not optimistic due to factors such as the tightening of the external environment.
India’s multi-policy boosts the economy
The Indian government has decided to relax the foreign direct investment regulations and hopes to attract more foreign investment to boost the Indian economy.
The Indian government announced that it will relax regulations on foreign direct investment in the retail and manufacturing sectors. For example, in the single-brand retail sector, India previously required foreign retailers to purchase 30% of their goods locally from India. According to the new regulations, among the total amount of goods purchased by foreign retailers within 5 years, the proportion of goods purchased locally from India can be no less than 30%.
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