The South Korean government pledged on Wednesday to support small businesses and the construction industry, which are struggling due to high interest rates, in the second half of 2024. They also raised this year's economic growth forecast.
"Small and medium-sized enterprises are still in a difficult situation. In the context of sustained high interest rates, their interest burdens are increasing, while wages and rental costs are also rising," President Yoon Suk-yeol said in a speech ahead of the government's biannual economic policy announcement.
Yoon stated that the government has prepared support measures totaling 25 trillion won (approximately 18 billion USD).
In the biannual economic policy agenda, the Ministry of Finance predicted that the economy will grow by 2.6% in 2024, up from the 2.2% forecasted in January. Economic growth in 2023 was only 1.4%, the lowest in three years.
The Ministry of Finance stated that economic growth will mainly be driven by semiconductor exports, particularly due to increased demand related to artificial intelligence. For 2025, the growth rate is expected to be 2.2%.
For small businesses and self-employed individuals, the government will provide policy loans, extend repayment deadlines, and lower interest rates, while also seeking policy measures to reduce fixed costs such as rent and utility expenses.
In the second half of the year, the government will increase financial support for small businesses by a total of 1 trillion won (approximately 721.8 million USD) to help them pay for utilities, interest, and wages.
Regarding inflation, the Ministry of Finance maintained this year's forecast at 2.6% and stated that consumer prices are expected to grow at a slower rate of 2.1% in 2025. Previously, the government had not provided a forecast for 2025.
