GOV’T FORECASTS GRIM ECONOMY IN 2023

[Anchor Lead]

The government cut South Korea's economic outlook for next year to 1.6%, citing high inflation and sluggish exports due to an economic slowdown. With citizens already cutting back due to high inflation, the government decided to provide various measures to tide over the immediate hardship to respond to such a myriad of crises.

[Pkg]

The corporate world is busy making necessary adjustments. Lotte Duty Free is receiving applications for early retirement for the first time since its founding. Shipping companies and securities firms are also poised to lay off workers.

[Soundbite] (Employee of Lotte Duty Free) : "We can't gain enough profit and run the shop properly. COVID-19 is also a concern."

Many enterprises plan to cut down on new hires and investments. Nine out of ten companies that already have management plans for 2023 opted to maintain the status quo or cut spending. In general, belt-tightening reduces consumption and lowers prices, but no such sign has been detected yet. In fact, the cost of dining out and other service sector prices are still subject to rise. This seafood restaurant raised its overall menu prices last month, because the cost of food ingredients and loan interests have gone up.

[Soundbite] Choi Hyeong-cheol(Restaurant owner) : "It's not the price of just one item but overall prices going up. Even if our revenue was KRW 50 mn, I'm left with only KRW 1 mn in profit."

To respond to such a myriad of crises, the government decided to provide various measures to tide over the immediate hardship, such as relaxing the conditions for debt settlement. There are mid-to-long-term plans to attract more corporate investment. The government will provide greater tax reductions on corporate investments and 50-trillion-won subsidy for facility investment. There is a government-led plan called "New Growth 4.0" in the area of future technology. However, there is still not enough assistance for the most vulnerable population in this period of economic downturn.

[Soundbite] Joo Won(Hyundai Research Institute) : "Future assistance for the disadvantaged class amounts to just an extension of existing policies. So the government has to make more proactive effort to strengthen social safety nets."

It is ill-advised to focus on only fiscal soundness when the economy is suffering as it is now.