South Korea's push to cut back on its investment on social infrastructure could result in hurting the country's growth potential down the road, a private think tank report said Sunday.
The report by the Hyundai Research Institute came as the country's social overhead capital (SOC) has been declining in recent years.
The report said that South Korea's total SOC spending declined steadily to 35.3 trillion won (US$32.5 billion) last year from 41.7 trillion won in 2010.
In particular, the central government's budget for SOC spending fell from 25.5 trillion won in 2009 to 23.1 trillion won last year, the report said.
The government has been pushing to further reduce its investment on social infrastructure in the years to come in a bid to cut its overall spending amid tight budget conditions.
Under its mid- and long-term fiscal spending plan, it seeks to reduce its SOC spending by an annual average of 0.5 percent until 2016.
"The government's SOC spending is an investment that stimulates national economy and strengthen its growth potential," the report said.
"Under the current government plan, there is a chance that it could lead to a vicious economic cycle," the report added.