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Lee, who took office late last month, convened his first "emergency" meeting of economy-related Cabinet ministers on Thursday and decided to place the top policy priority on combating rising inflation caused by higher import costs of grains, energy sources and raw materials.
"There are looming signs of global economic crisis," Lee told ministers, referring to the escalating credit and liquidity crunch in the United States compounded by concerns about the impact of the U.S. sliding into recession.
Lee, the country's first CEO-turned-president, ordered his Cabinet to be on high alert against any further external shocks to South Korea's export-driven, import-dependent economy, calling for all-out efforts to stabilize consumer prices.
In an initial emergency step to tame inflation, the Lee-chaired meeting decided to lift import tariffs on dozens of grains and raw materials and move to freeze public utility charges. Under the measures, import tariffs on 82 "price-sensitive" items, such as wheat, corn, soybean, oil products and other raw materials, will be lifted or lowered starting April 1.
Lee also ordered ministers to keep a close watch on about 50 key products directly related to people's livelihoods. The items, which will be identified soon for intensive oversight, may include rice, pork, cabbage, radishes, garlic, eggs and milk, among others.
"President Lee and economic ministers expressed concern over soaring global prices of oil and other raw materials during the two-hour meeting," presidential spokesperson Lee Dong-kwan told reporters after the meeting.
The government has also decided to increase the weekly output of aluminum, copper, nickel and other nonferrous metals by about 40 percent to 4,800 tons from 3,500 tons to ease shortages of raw materials. In addition, the government unveiled a plan to freeze almost all public utility rates, including public transportation fees and tap water charges, through consultations with provincial governments and public corporations.
"The freeze of public utility rates will be enforced through the rationalizing of public corporation management and fiscal assistance to provincial governments," the presidential spokesman said, vowing tough crackdowns on price-rigging. The set of measures came after warning that Lee's much-touted goal of economic growth over 6 percent is almost impossible because consumers are expected to keep their belts tight due to rising inflation.
Consumer prices rose 3.6 percent last month from a year earlier, exceeding the central bank's target of 2.5-3.5 percent for the third straight month. Consumer inflation accelerated to 3.9 percent in January on-year, the biggest increase in more than three years after rising 3.6 percent in December.
Analysts also warn South Korea's export growth could lose momentum due to a troubled U.S. economy, the nation's second-largest export market, and possible global slowdown. Export growth unexpectedly accelerated in February, rising 20.2 percent on-year, on the back of strong demand from China, the Middle East and other emerging markets. But the outlook remains bleak with the sliding U.S. economy.
President Lee's high-profile economy campaign comes ahead of next month's parliamentary elections, widely considered as crucial for Lee's ruling conservative camp to push its more pro-United States, anti-North Korea policies.
If Lee's Grand National Party fails to secure a majority in the National Assembly, which is still dominated by liberal lawmakers, his political fate will remain unstable throughout his single five-tear term.
In an apparent bid to woo votes for his party "dedicated" to economic revival, Lee has floated a sense of economic crisis in the country. In his half-hour speech to economic officials earlier this week, Lee used the word "crisis" 19 times, stressing the need for political stability to get through looming economic troubles.
His repeated warnings of economic crisis have triggered criticism from the opposition party, which said, "The president is amplifying economic problems to take a better position in next month's parliamentary polls."
