Deputy Prime Minister and Minister Hong Nam-ki of the Ministry of Economy and Finance (MOEF). (Photo: MOEF)

The 2021 Annual Meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) will take place from Oct. 11 through Oct. 17.

The International Monetary and Financial Committee (IMFC) and Development Committee (DC) meetings will be held in a hybrid format, and their members invited to attend in person.

All public and by-invitation-only events will be virtual and accessible on IMF and World Bank digital platforms.

They include the Program of Seminars and other public events, ministerial meetings, CSO engagements, and press conferences.

To accommodate time-differences, events may take place outside of the principal week. The IMF and WBG buildings will only be open to essential staff, and select Ministers/Governors and delegates attending the Meetings.

The Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund bring together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organizations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.

Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world's financial system.

MOEF Hosts G20 Global Financial Stability Conference 

 The Ministry of Economy and Finance (MOEF) and Korea Development Institute (KDI) co-hosted on Sept. 7 the G20 Global Financial Stability Conference 2021, where about 300 participants from home and abroad discussed policies to ensure global financial stability and support solid growth, as well as exploring strategies for post-pandemic financial markets and systems.

The conference consisted of three sessions:

1) The Global Financial Stability Risks and Policy Coordination in the Pandemic Era.

2) The Digital Currency and their Macro-Financial Implications.

3) Post-Pandemic International Financial Market and System.

In his opening remarks, First Vice Minister Lee Eog-weon highlighted three features that should be put at the center of G20 cooperation in seeking global financial market stability and sustainable growth, saying that uneven recoveries are casting a dark shadow on the global economy.

1) G20 should provide communication channels via which measures to support fast global recovery, including a rapid vaccine rollout and an orderly exit from current policies, can be discussed.

2) G20 must play a key role in global financial cooperation and must lead discussions about global financial stability.

3) G20 must provide a platform to address new challenges to the post-COVID international financial system.

Policy suggestions offered during the conference will be carefully reviewed for discussions, which will be held at the G20 Finance Ministers’ Meeting and G20 Summit, scheduled in October 2021.

2022 Budget Drawn Up to Help Make Strong Leap Forward

The government proposed an expansionary budget of 604.4 trillion won for 2022, an 8.3 percent increase from the previous year.

Tax revenues growing extensively backed by steady recovery, fiscal deficits are expected to decline substantially by 20 trillion won in 2022.

The 2022 budget aims to help citizens recover from the pandemic, promote the sharing of economic recovery and push toward an adequate preparation for a post-pandemic economy.

In 2022, the government will work toward these goals as it will increase recovery-support investment, raise spending on inclusive growth, boost investment in net-zero, digital transformation and other restructuring issues, and reinforce social security insurance.

The 2021-2025 fiscal management plan has been drawn up to secure fiscal sustainability in the mid-term according to the fiscal rules, as well as through fiscal spending innovation.

IG3 Budget up 43% in 2022 to 6.3 Trillion Won

Deputy Prime Minister Hong Nam-ki presided over the 14th Meeting to Promote BIG3, a subsidiary committee of the Industrial Innovation Meeting, held on August 30.

Measures to promote future cars, such as ensuring repair and inspection services, are main topics of discussion, as well as plans to help develop next generation sensor technologies and encourage bio-tech enterprises to develop into one of the 50 most competitive global enterprises in the sector.

The 2022 BIG3 budget proposal was another topic of discussion.

The following is a summary of Deputy Prime Minister Hong’s keynote address.

BIG3 delivering brilliant performance despite the pandemic, the government has drawn up a big budget next year for those industries, assigning 43 percent more money than in the preceding year, making it a total of 6.3 trillion won.

In addition to the tax incentives laid down in the 2021 tax revision, such as larger tax reductions for R&D and facilities investment in the BIG3 area than cuts given to other new growth engines or essential technologies, the government will continue to work out new measures which will cover the wide areas of fiscal, tax, financial and regulatory support. 

 Backed by strong support given over the last three years, worth 10 trillion won in total, Korea’s semiconductor revenues have returned to world’s first place in three years, more and more battery enterprises are operating in the black, and bio-health has registered some of its products on the list of the country’s 10 major exports.

Manufacturing, Services and Construction Improve

Manufacturing, services and retail sales rose in June, as well as construction investment, facilities investment, meanwhile, slowing. Jobs continued an upward trajectory in July and consumer price inflation speeded up.

Industrial production rose 1.6 percent from the previous month in June as manufacturing (up 2.2%, m-o-m and up 11.9%, y-o-y) and services (up 1.6%, m-o-m and up 4.9%, y-o-y) both improved. Compared with a year ago, industrial production rose 6.7 percent.

Retail sales (up 1.4%, m-o-m and up 1.6%, y-o-y) and construction investment (up 2.0%, m-o-m and down 3.1%, y-o-y) rose in June, and facilities investment slowed somewhat (down 0.2%, m-o-m and up 10.0%, y-o-y).

Exports went up 29.6 percent year-on-year in July backed by strong semiconductors, petrochemicals and other major products.

Average daily exports, an indicator calculated according to the days worked, rose 32.2 percent from a year ago (US $1.71 billion, July 2020 → US $2.26 billion, July 2021).

The consumer sentiment index (CSI) fell 7.1 points in July to 103.2. The business sentiment index (BSI) for the manufacturing sector declined 1 point to 97, and the BSI outlook for August dropped 7 points to 92.

The cyclical indicator of the coincident composite index for June rose 0.1 points to 101.4, and the cyclical indicator of the leading composite index increased 0.3 points to 104.4.

The economy added 542,000 jobs year-on-year in July and the unemployment rate fell 0.8 percentage points from a year ago to 3.2 percent.

Consumer prices rose 2.6 percent year-on-year in July due to high prices of fresh food and oil products. Core inflation rose 1.7 percent.

Both stock prices and Korea treasury yields fell in July as risk appetite waned amid virus resurgence. The won weakened.

Housing prices continued to rise in July (up 0.79% → up 0.85%, m-o-m), as well as Jeonse (lump sum deposits with no monthly payments) prices (up 0.45% → up 0.59%, m-o-m).

Consumer Price Index Rises 0.6 Percent in August

The Consumer Price Index was 108.29(2015=100) in August 2021. The index increased 0.6 percent from the preceding month and rose 2.6 percent from the same month of the previous year.

The index excluding food and energy was 107.57 in August 2021. The index increased 0.3 percent from the preceding month and rose 1.3 percent from the same month of the previous year.

The Consumer Price Index by expenditure category in August 2021 was below.

The index for Food and non-alcoholic beverages, Alcoholic beverages and tobacco, Housing, water, electricity, gas and other fuels, Furnishings, household equipment & routine maintenance, Transport, Recreation and culture, Restaurants and hotels, and Miscellaneous goods and services increased 2.4 percent, 0.1 percent, 0.3 percent, 0.4 percent, 0.8 percent, 1.1 percent, 0.4 percent, and 0.1 percent respectively from the preceding month.

The index for Health decreased 0.1 percent respectively from the preceding month.

The index for Clothing and footwear, Communication, and Education remained unchanged from the preceding month.

Production Trends

The Index of all industry production in July decreased by 0.5 percent from the previous month. The Index of Mining & Manufacturing industries and Service industry went up but Public administration and Construction industry went down from the previous month.

The Manufacturing Production Index in July showed no change from the previous month but increased by 7.6 percent from the same period of the previous year.

The Manufacturing Shipment Index in July increased by 0.4 percent from the previous month and 5.9 percent from the same period of the previous year.

The Manufacturing Inventory Index in July increased by 1.8 percent from the previous month but decreased by 3.2 percent from the same period of the previous year.

The Production Capacity Index in July decreased by 0.3 percent from the previous month but increased by 1.0 percent from the same period of the previous year.

The Index of Capacity Utilization Rate in July increased by 0.6 percent from the previous month and 5.3 percent from the same period of the previous year.

The Manufacturing Average Capacity Utilization Rate in July marked 74.1 percent, which increased by 0.5 percentage points from the previous month.

The Index of Services in July increased by 0.2 percent from the previous month and 4.2 percent from the same period of the previous year.

The Retail Sales Index in July decreased by 0.6 percent from the previous month but increased by 7.9 percent from the same period of the previous year.

The Equipment Investment Index in July increased by 3.3 percent from the previous month and 11.7 percent from the same period of the previous year.