skip to main content
Briefing

South Korea: Fiscal Policy

Appears in: Asia/Pacific, Macroeconomy, Northeast Asia, South Korea, Fiscal Policy

Critical Issues

Background:

From 2006-08, the South Korean government ran a slight budget surplus, but the 2008-09 Global Financial Crisis resulted in the government using fiscal stimulus to stave off economic disaster. The government’s response to the crisis was timely and aggressive, involving multi-dimensional support to the private sector and a supplementary budget of US$22.9 billion that was passed in April 2009. Policymakers spent US$40 billion to stabilize the Korean market.To avoid weakening private demand by exiting prematurely from easy fiscal policy, the government said it would continue to maintain an expansionary fiscal policy and front-load its budget during H2 2009 and 2010. Considerable stimulus spending created a fiscal deficit of 2.0% of GDP, while South Korea's debt to GDP ratio stood at 24.3% in 2010. Due to fiscal consolidation measures, including tax reforms, the IMF said in a November 2010 report that South Korea's debt-to-GDP ratio would ease from 32% in 2010 to 24% in 2015. The IMF also projected that South Korea's fiscal surplus would increase from 1.4% in 2010 to 2.6% in 2015.

Access to this content is restricted to RGE clients.

If you have a client code, please enter it here to activate your client account.

Click here for a free trial.

Learn About Our Services:

RGE Research

Our dynamic and intuitive macroeconomic research platform keeps you on top of the extraordinary shifts that transform our global economy, allowing users to uncover unique connections and insights. Discover the resource central banks and that 70% of the world's leading hedge funds, asset managers, PE firms, banks and corporations around the world depend on.

Our market strategists build on the work of our macroeconomic research team, incorporating market dynamics to answer crucial questions and generate actionable investment recommendations. RGE's Market Research and Strategy team gives clients actionable insight across six key asset classes:

• Currencies • Commodities
• Credit • Equity • Gov’t Bonds / Rates
• Emerging Markets • Financials
• Cross Asset Model Portfolio

RGE Strategy

Sometimes, reading research is not enough. Many RGE clients participate at the Roubini Direct Access level to gain a deeper understanding of specific issues. Through interactive live sessions, we engage with world-class thinkers, encourage knowledge sharing, idea generation, risk identification and validation of client initiatives.

Learn More »

For information on becoming an RGE Client, please speak with an RGE Representative in New York at +1 212-645-0010, or in London at +44 (0) 207 092 8850, or email americas@roubini.com for the Americas, europe@roubini.com for Europe, the Midddle East and Africa, and asia@roubini.com for Asia/Pacific.

Associated Readings

News Bank of Korea Jan 19, 2010 The Bank of Korea and the Bank of Japan announce the extension of the Measure to Increase the Size of the Won-Yen Swap Arrangement News Ministry of Strategy and Finance Jul 02, 2009 Korea: Plans to Promote Corporate Investment Analysis Bank of Korea Mar 30, 2009 Bank of Korea will fund Korea Development Bank with 3,296.6 billion won in loans Analysis Daishin Securities Jeffrey Choi Mar 16, 2009 Advantages and disadvantages of the Corporate Restructuring Fund and the Financial Market Stabilizing Fund Analysis Financial Services Commission Mar 31, 2009 Bank Recapitalization Fund - 1st Round Purchase: KRW3.956 trillion in bond purchases Analysis Danske Bank Oct 20, 2008 South Korea: Government announces bank rescue package Analysis Fitch Ratings Apr 02, 2009 Korean Banks – Government Support Measures Analysis Financial Supervisory Service Nov 14, 2008 South Korea: A Plan to Devise the “Bond Market Stabilization Fund” Analysis Danske Bank Flemming J. Nielsen Dec 11, 2008 Asia: South Korea, Japan and China agree on new swap facilities News Digital Chosun Ilbo Dec 05, 2008 FSC to Help Struggling Exporters Analysis Bank of Korea Oct 29, 2008 The Bank of Korea Announces Swap Facility with U.S. Federal Reserve News Reuters Oct 18, 2008 Chronology - South Korea reveals steps to stabilise market

Publications

Our Research
?

Our Thoughts
?

Outlook Center
?

Central Bank Watch
?

Key Views
?

Scenario Analysis
?
RGE Clients can activate their account by updating Manage My Account

Top 10 Most Read

Our Research
1. Belated White Knight: ECB Policy Options for the EZ Recession and Credit Crunch
Global Macro-Market Outlook
2. Macro-Market Overview: May 2013
Our Thoughts
3. The fall in China’s Flash PMI and 2013 growth prospects
Our Thoughts
4. Downplaying the hawkish signal in the April FOMC meeting minutes
Our Thoughts
5. The selloff in Japanese equity
Our Research
6. Summary of Key Views
Our Research
7. Europe’s Playbook for Financial Crises
Our Thoughts
8. Differences and similarities in Brazilian and Mexican inflation numbers
Our Research
9. The Other Fat Tail: Monetary Policy and Bubbles
Our Research
10. Recent U.S. Data Signals Suggest Slow and Steady Activity

ROUBINI FEEDBACK FORUM

What Do You Think?
Weigh in on Roubini.com's new look or report any problems you encounter.

Website Feedback Content Feedback