South Korea yesterday unveiled new stimulus measures worth US$5.2 billion to boost domestic demand as its export-driven economy struggles with the global economic downturn.
The finance ministry said it would push for fiscal support worth 5.9 trillion won (US$5.23 billion) — 4.6 trillion won for the remainder of this year and 1.3 trillion won for next year.
The new support, which followed a package of 8.5 trillion won in June, does not require an additional budget as it comes mostly in the form of reducing taxes and expanding social welfare programs.
“There are growing concerns about our sagging economic power,” South Korean Finance Minister Bahk Jae-wan said, citing weak global markets and the prolonged eurozone debt crisis.
In June, South Korea revised its growth forecast for this year down to 3.3 percent from its earlier projection of 3.7 percent, mainly as a result of slumping exports.
In an effort to boost the flagging real-estate market, capital gains taxes will be exempted for five years for newly built homes purchased this year, the ministry said.
The housing acquisition tax will be halved for home purchases taking place during the rest of this year, it said, while individual income tax will also be cut.
Also, individual consumption taxes for cars and home appliances will be cut until the end of the year by 1.5 percentage points to 3.5 percent for small cars and to 6.5 percent for big cars, while duties on home appliances will fall to 3.5 percent.
The new stimulus measures are expected to boost economic growth by 0.06 percentage points this year and 0.10 percentage points for next year, the ministry said.