Director Jin Shizhi of KDI emphasizes the need for innovative policies rather than boosting the economy

TechubNews · 2026-03-10T07:25:29+00:00

Newly appointed President of the Korea Development Institute, Kim Se-Jeol, pointed out that fiscal policy should be approached with caution, especially when economic uncertainty affects vulnerable groups. He is concerned about the potential impact of Middle East conflicts on the Korean economy, believing that the long-term growth rate has entered a low point. Past stimulus policies failed to effectively address the issues and instead led to household debt and a real estate bubble. He proposed the need for innovative ideas, such as a nationwide creativity registration system, to promote economic development.

TechubNews

2026-03-10 07:25:29

Abstract generation in progress

Newly appointed Korea Development Institute (KDI) President Kim Seok-jil stated at a press conference on the 10th that fiscal policies aimed solely at boosting the economy should be approached with caution. However, he also pointed out that when recent international conflicts and other economic uncertainties negatively impact vulnerable groups such as low-income households and small business owners, government fiscal support can help mitigate these shocks. In such cases, active fiscal policies may be appropriate.

Regarding the impact of conflicts in the Middle East on the Korean economy, he said it is currently difficult to predict the specific effect on economic growth rates. These external factors may change depending on the spread or prolongation of the war, making early conclusions difficult. He also expressed concern about the ripple effects of oil price and exchange rate fluctuations on the domestic economy, noting the need to analyze their impact on rising prices and slowing economic growth.

President Kim pointed out that Korea’s long-term economic growth rate has been steadily declining and has now entered the 0% range. He commented that although multiple previous governments attempted to stimulate growth through measures such as boosting construction industry activity, low-interest-rate policies, and easing loan restrictions, these efforts failed to prevent the decline in long-term growth. Instead, they led to side effects like soaring household debt and skyrocketing real estate prices.

He emphasized that solving this issue requires new, creative ideas and proposed measures such as a nationwide creativity registration system and the introduction of tax and subsidy incentives. He explained that these measures could help promote intellectual property protection and overall economic innovation.

In the face of such economic volatility and uncertainty, Korea’s economic response will likely depend on future economic policies. Currently, the neutral role of fiscal policy and policies that promote market innovation seem to be increasingly important.

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