© Reuters. FILE PHOTO: Street vendors (L) wait for customers at Myeongdong shopping district in Seoul, South Korea, January 9, 2023. REUTERS/Kim Hong-Ji
By Choonsik Yoo
SEOUL (Reuters) – South Korea unveiled on Wednesday a package of measures aimed at boosting domestic consumption, but stopped short of offering big-ticket plans for fear of stoking inflation, which is slowing but still high.
The government said in a statement distributed by the finance ministry that it would implement steps necessary to attract more foreign tourists and boost their spending while staying in the country.
The measures were reported at a meeting headed by President Yoon Suk Yeol, who said at the beginning that the government needs to take steps to attract more foreign tourists, such as increasing international flights.
“The conditions are forming so that we can aim to help the consumption and tourism business operations recover to the levels seen before the COVID-19 pandemic,” Yoon said.
The government said in the statement it would help the number of weekly flights to and from China, Japan and Southeast Asia rise by September to 90% of that operating in 2019, compared with some 60% in February.
Other than that, measures included in the more than 30-page statement were mostly low-key ones as the government is worried about rekindling slowing but still sticky inflation.
South Korea’s policy authorities are faced with the double task of keeping the economy from cooling too fast while making sure that inflation continues to head down below the 2% target.
Ratings agency S&P Global (NYSE:) Ratings said in a report on Sunday growth in South Korea’s trade-reliant economy would slow to 1.1% this year, far below the government’s projection of 1.6%, from 2.6% last year.
Inflation, however, remains more than twice the central bank’s target although falling in recent months, making it difficult for the authorities to shift policy focus away from a tightening bias.