When incumbent finance minister Yoo Il-ho took office in January 2016, the South Korean economy was not in rude health.
Yoo was tasked with accelerating growth in Asia’s fourth-largest economy, which slowed to 2.6% in 2015 — the slowest growth in three years. Perhaps his most important task was attempting to stem the sharp decline in exports, which had fallen for 12 consecutive months before Yoo took the job.
South Korea was far from immune to the uncertainties facing the global economy last year. The election of US President Donald Trump — and the never-ending debate about what he means for Asia — could be critical to South Korea, since the US is its second largest trading partner after China.
So far, Yoo appears to be doing a good job ... although with his boss, president Park Geun-Hye, kicked out of office and a new electios due in May, Yoo's future is in severe doubt. For now, he can add 3rd place in our Finance Minister of the Year study to his CV.
One of his biggest achievements is boosting the struggling export sector, putting an end to a 19-month decline in August. That has beaten even his own expectations. Yoo previously predicted that monthly export figures would not return to growth at least until this year.
Another bright spot has been outbound shipment, which has grown for three straight months since November after swinging back to contraction in September and October. In January 2017, exports rose 11.2% on a year-on-year basis to $40.3 billion, the fastest growth in nearly five years.
Yoo has largely continued the expansionary fiscal policy adopted by his predecessor Choi Kyung-Hwan. In June the former land minister unveiled a W20 trillion won ($17 billion) fiscal stimulus package in the wake of Brexit, and also introduced tax code revisions to reduce the tax burden on low- and middle-income earners.
These expansionary fiscal measures helped push South Korea’s headline inflation to 0.97% last year from 0.62% in 2015, relieving fears of looming stagflation in the export-dependent nation.
Under Yoo’s watch South Korea is taking a step closer to President Park Geun-hye’s “474 Vision” — representing the target of achieving 4% economic growth, a 70% employment rate and $40,000 per capita income.
Unofficial figures show South Korea’s GDP growth accelerated to 2.75% in 2016, while the employment rate stood at 64.2% and per capita income exceeded $25,000 by the end of last year.
Yoo also maintained the country’s large current account surpluses and earned a sovereign credit rating upgrade to AA from Standard & Poor’s in August last year.
It is easy for international observers to Korea to concentrate on the political scandal gripping the country, the travails of Samsung’s Galaxy Note 7, and the collapse of Hanjin Shipping, the country’s largest container line.
But a finance minister should be judged on how he has contributed to a sound economy. There is little doubt that Yoo has done well.
We are releasing our Finance Minister of the Year rankings day by day. Tomorrow: the silver medal goes to a minister who can boast a landmark achievement that took decades to push through.
