Fiscal Spending Growth Projected To Slow In 2024, Bond Issuance To Be Lower

South Korea’s government has proposed a budget for 2024 whereby spending will be 656.9trln won, up 2.8% on levels from 2023. This compares with a 5.2% increase this year and is reportedly the smallest rise going back to the early 2000s. Areas of spending focus will be social welfare, defence and corporate support.

• The fiscal deficit is projected to widen next year to -3.9% of GDP in 2024, from a projected -2.6% this year. Debt to GDP is forecast to rise to 51.0% from 50.4% this year. Tax revenue is forecast to fall 8.3% to 612.1trln won.
• Part of this reflects a softer economic backdrop, although GDP growth is forecast to recover some ground next year to 2.4% from this year’s projected 1.4%.
• The government plans to issue 158.8trln won in treasury bonds next year, versus a projected total of 167.8trln won for this year. Net issuance is forecast at 50.3trln won.