The South Korean government on Tuesday proposed its biggest spending expansion in a decade with an intention to create more jobs.
According to the 2019 budget proposal, spending will increase by 9.7 percent from last year to KRW 470.5 trillion. The finance ministry said the annual growth in spending was the biggest since the aftermath of the financial crisis in 2009.
Health, welfare and labor account for the major portion of government expenditure, with a 12.1 percent increase from the last year’s budget.
The budget allocated KRW 23.5 trillion for job creation, up by 22 percent compared to previous budget.
In July, the unemployment rate had climbed to 3.7 percent from 3.4 percent in the same period of 2017 as the number of unemployed surged by 81,000.
Investment in research and development will be raised by 3.7 percent to around KRW 20 trillion. At the same time, the government revenue will increase by 7.6 percent to about KRW 481 trillion in 2019, the ministry said.
The fiscal deficit is estimated at 1.8 percent of GDP and the national debt is forecast to reach 39.4 percent of GDP, next year.
The government forecasts the economy to grow 2.9 percent this year. The Bank of Korea also projected 2.9 percent growth for 2018, and 2.8 percent for 2019.
In the second quarter of 2018, the economy expanded at a slower pace of 0.7 percent sequentially, following first quarter’s 1 percent increase.