[News Today] GOV’T AIMS FOR EARLY SPENDING

[LEAD]
The government forecasts this year's inflation and economic growth at 1.8%. Economic growth falls below the 2% potential for the first time in two years. The forecast takes into consideration improvements in international oil prices and domestic consumption. To meet these expectations, the government will focus on accelerating budget execution in the first half of the year.

[REPORT]
This woman is thinking about buying an electric car.

The salesman shows a model and tells her about all the functions and specifications. But he advises her to buy it a little later.

Ji Yong-tae / Car salesman
There are no subsidies available now. It'd be better to wait to purchase until the central and local governments announce their subsidy plans.

January and February are considered virtually dead months for EV sales.

This is because the EV subsidy amounts used to be finalized in early March. But this year's subsidy payment will be made from the third week of January.

A grant for youth employment will be paid out starting today, about a week earlier than usual and the allowance for elderly employment, which used to be paid at the end of February, will be given out at the end of this month.

Loans for small businesses also start on the third week of this month.

The government is planning to speed up spending since the money is there to be spent anyway.

Kim Jae-hoon / Ministry of Economy and Finance
A record amount of budget will be executed in the first half of the year, so that we can see additional economic boost of more than KRW 5 tn.

Lowering special consumption tax, a frequently used tactic to boost spending, will resume after 18 months.

The special consumption tax rate will be lowered from 5% to 3.5% for a limited time during the first six months.

This means, for example, an individual purchasing a car priced at 40 million won, or little over 27,000 dollars can save 700,000 won in tax, roughly 477 dollars.

The government aims to spend 67% of the year's total budget in the first six months of the year.

The government even released an unusual press release that said some 330 billion won, roughly 225 million dollars, were spent on yesterday alone, the first business day of the year. That is 2.5 times more compared to last year.