S. Korea to Frontload 2017 Budget Spending in Q1

The South Korean government said Wednesday that it will frontload its 2017 budget spending in the first three months of next year in order to pump-prime the economy struggling with faltering exports and lukewarm consumption.

    "The South Korean economy will experience a further slowdown in 2017 due to rising external uncertainties and contracting domestic demand," said the government after a ministerial-level meeting in Seoul chaired by Finance Minister Yoo Il-ho.

    The government will make budget-frontloading efforts in the first quarter and encourage public firms to expand investment in a bid to reduce downside risks on the economy and employment." In particular, spending for job creation will be used in the first quarter to help stabilize people's livelihoods, it added.

    Earlier, the finance ministry said it will use nearly 70% of the 400 trillion-won about (US$342.5 billion) budget earmarked for next year in the first six months to pre-emptively cope with economic uncertainties stemming from the political turmoil in South Korea and a government change in the United States.

    Also, Yoo earlier hinted at a possible supplementary budget next year if economic conditions worsen, stressing the fiscal role to buttress the economy.

    Asia's fourth-largest economy is experiencing a tepid recovery due to faltering exports and lukewarm domestic demand coupled with the recent political turbulence sparked by the impeachment of South Korean President Park Geun-hye.

    Its exports, the key economic driver, have posted minus growth 21 times in the past 23 months, while fiscal spending, which has contributed to boosting private consumption and the real estate market throughout 2016, is expected to lose ground in the coming months due to the leadership vacuum in the government.

    The finance ministry will unveil its detailed economic policy plan on Dec. 29, with a downgrade of its earlier growth forecast of 3% .