June 4, 2017 / 5:53 AM / in 2 months

South Korea says extra budget aimed at job creation, not economic stimulus

2 Min Read

A street vendor counts his money at the Namdaemun Market in Seoul, South Korea, May 30, 2017. Picture taken on May 30, 2017.Kim Hong-Ji

SEOUL (Reuters) - An extra budget to be announced by South Korea on Monday is intended to create more jobs, not to boost economic growth, the president's secretary for policy said on Sunday.

"This extra budget is not linked to economic growth we're seeing right now but rather the social classes that are in pain at the moment; it will be to improve their quality of life," Jang Ha-sung told reporters at a media briefing.

Jang, a veteran academic specialising in finance, was named top policy adviser to President Moon Jae-in last month.

He described the current state of jobs as a "catastrophe" that cannot be left alone.

The overall unemployment rate in April stood at 4.2 percent in non-adjusted terms, but the jobless rate for young South Koreans aged 15 to 29 has recently lingered in the double-digit range, sparking concern.

The government's proposed extra budget must be approved by parliament. Opposition lawmakers have said the plan does not meet legal requirements for such spending, but Moon has been firm that it must pass.

The country's first liberal president in nearly a decade, Moon has promised job creation will be a top priority during his presidency.

South Korea's economy has been steadily improving this year on the back of a rebound in global demand for Asian goods.

In May, exports rose for a seventh straight month by 13.4 percent as demand held up for key products such as semiconductor chips and displays.

Boosted by construction activity, Asia's fourth-largest economy grew 1.1 percent in January to March on a seasonally adjusted basis, its highest for six quarters, revised data showed on Friday.

Improving growth has cemented market views that the central bank's policy loosening cycle is over and that the Bank of Korea will likely start normalising rates next year.

Its current interest rate is a record-low 1.25 percent and it is expected to keep it there for the rest of this year.

Reporting by Christine Kim; Editing by Kim Coghill

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