Issue Focus

● Major institutions forecast the economic growth rate of 3~4% in 2021, and the year 2022 is expected to be slightly slower than the forecast for 2021. Currently, private consumption continues to be sluggish in domestic demand due to the re-spread of COVID-19 and strengthening social distancing. - The number of confirmed cases of COVID-19 has been gradually increasing recently, and it is difficult to eradicate it due to the occurrence and spread of the mutant virus, and the epidemic is expected to continue for a while. ● Expansionary fiscal policies, such as large-scale supplementary budgets to overcome COVID-19, alleviated the economic contraction, but the effect of improving economic growth rate was relatively small as it was concentrated on transfer expenditures to support the classes affected by COVID-19. ● SOC investment is analyzed to have a great effect on economic growth and job creation. The UK Treasury analyzed that a 10% increase in the public capital stock could increase GDP by 1-2%, partly through productivity gains. - The National Assembly Budget Office analyzed that SOC fiscal investment has a great effect on economic growth and job creation. ● The SOC budget is increasing as of 2018, and the SOC budget for 2022 is 27.8 trillion won, up 1.3 trillion won from the previous year. However, when converted to real prices as of 2015, it was 25.8 trillion won, which is still lower than immediately after the financial crisis. - The US SOC budget (based on nominal prices) continued to increase from the previous year from 1956 to 2017, except for 2011 (-0.4%). The ratio of the SOC budget to GDP was maintained at 2.28 to 3.03% from 1956 to 2017. - The UK has raised its total budget for 2020-2021 to £100 billion, and aims to invest over £600 billion in the public sector over the next five years. Existing projects such as schools and hospitals, balanced regional development, green industrial revolution, climate change response, jobs Investments are planned for the implementation of support, etc. ● The appropriate level of SOC investment according to the endogenous economic growth model for economic growth of 2.5~3.0% is estimated to be 2.52% to 2.80% of GDP. - Barro and Sala-i-Martin (1995), Aschauer (2000), Kamps (2005), and Ryu (2006, 2012) estimated the appropriate SOC stock size that maximizes economic growth rate using the endogenous economic growth model, This has been used to evaluate the adequacy of SOC investment in the National Fiscal Management Plan since 2012. To achieve the economic growth rate of 2.5% in 2022, about 53 trillion won of SOC investment is required, and an additional SOC investment of about 1.7 trillion won is needed compared to the current projected expenditure. In other words, the central government's SOC investment to achieve an economic growth rate of 2.5% in 2022 requires an investment of at least 30 trillion won. - To this end, it is necessary to not only promote balanced development through the development of the overall industry and linkages between regions, but also inspect and invest in infrastructure that improves the quality of life of the people and facilities that protect the safety of the people.