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Economy

Moon Jae-in targets 4% growth in South Korea this year

Entering final year in office, president vows to bolster nation's chip industry

South Korean President Moon Jae-in speaks in Seoul on Monday to mark four years since he took office.   © Yonhap/Kyodo

SEOUL -- In a speech to mark four years since coming to office, South Korean President Moon Jae-in targeted 4% growth this year for an economy that has largely withstood the ravages of the pandemic.

"I will mobilize all government resources and boost the vitality of the private sector to reach a growth rate of more than 4% for the first time in 11 years," Moon said on Monday. "The government will lead the economic recovery with an active and expansionary fiscal policy. The government will support corporate investment and spare no effort to help exports reach a record high."

South Korea's gross domestic product returned to pre-pandemic levels in the first three months of 2021, growing 1.6% from the previous quarter. Exports and corporate investment led the momentum as demand for chips increased amid the pandemic, according to the Bank of Korea.

Moon also vowed to strengthen the nation's leadership in the semiconductor sector as the global supply chain is being realigned amid trade and tech tensions between the U.S. and China. With chips being key components in industrial sectors from autos to smartphones and home appliances, the president said the government would help chipmakers expand their territory to system chips from memory chips.

Home to Samsung Electronics and SK Hynix, South Korea is a powerhouse in memory chipmaking. Samsung is aiming to catch up Taiwan Semiconductor Manufacturing Co. in the foundry business.

Global investment banks are split over whether Moon's target for growth of more than 4% is realistic.

JPMorgan raised its forecast for the country's annual GDP growth to 4.6% from 4.1% last month, reflecting the better-than-expected expansion in the first quarter. However, Nomura maintained its forecast for growth of 3.6%, expecting the domestic economic recovery to be gradual and bumpy relative to the solid export-led growth.

However, he drew a line on pardoning Samsung Electronics Vice Chairman Lee Jae-yong, who is serving a two-and-half year jail term for bribery and embezzlement.

"It is true that we need to improve our competitiveness in the semiconductor sector. But, at the same time I cannot help but think of fairness and cases in the past," Moon said in response to a reporter's question after his speech. "It is a president's right, but I don't think that a president can exercise this by his or her own will."

Moon also refused to be drawn on whether he would pardon two former presidents, Lee Myung-bak and Park Geun-hye, who are serving lengthy prison terms after convictions following corruption scandals.

On North Korea, Moon said he would use talks with U.S. President Joe Biden later this month to find out ways to resume talks between the two Koreas and between Washington and Pyongyang.

Moon welcomed Biden's North Korean policy, evaluating it as a flexible and pragmatic approach for complete denuclearization on the Korean Peninsula.

The presidential Blue House said that Moon will travel to the U.S. for a summit with Biden on May 21 to reaffirm their alliance, as well as to discuss denuclearization and cooperation in the economy and trade.

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