ID :
23384
Thu, 10/09/2008 - 11:10
Auther :
Shortlink :
https://oananews.org//node/23384
The shortlink copeid
IMF lowers next year's growth forecast for S. Korea, global economy
By Hwang Doo-hyong
WASHINGTON, Oct. 8 (Yonhap) -- The International Monetary Fund (IMF) Wednesday lowered its growth predictions for South Korea next year to 3.5 percent, citing the U.S.-sparked financial crisis spreading across Asia and Europe.
In its July forecast the IMF predicted South Korea's economy would grow 4.3
percent in 2009, saying the country's economy and those of its major trading
partners could regain momentum early next year.
Predictions for this year's growth remained unchanged from the July forecast at
4.1 percent.
South Korean President Lee Myung-bak campaigned late last year on a pledge to
achieve 7 percent annual growth for the world's 13th largest economy. Seoul
officials have since lowered the figure to 6 percent, citing the adverse external
environment. South Korea's economy grew 5 percent last year.
The IMF also lowered this year's growth predictions for the global economy to 3.9
percent from 4.1 percent projected three months earlier, and downgraded next
year's growth estimate to 3 percent from its earlier forecast of 3.9 percent. The
growth rate for 2007 stood at 5 percent.
The U.S. economy, meanwhile, is projected to grow by 1.6 percent this year and by
a mere 0.1 percent next year, according to the IMF.
"These projections are well below those provided in the July 2008 World Economic
Outlook Update, reflecting increasing evidence in recent months of slowing
activity, the further burgeoning of the financial crisis, and a heightened
appreciation of the degree to which financial deleveraging is likely to be an
extended constraint on growth," the IMF said in a semiannual World Economic
Outlook.
The statements came as the Dow Jones Industrial average plummeted on Tuesday to
9447.11 points after several straight days of steep losses as investors remain
skeptical about the viability of the U.S.$700 billion bailout package signed by
U.S. President George W. Bush last week.
The unprecedented bailout plan came in response to the collapse of several major
U.S. financial institutions impacted by the subprime mortgage crisis and
subsequent credit crunch.
Critics say the biggest government intervention since the Great Depression will
not solve the problem caused by the "asset bubble" unless housing prices stop
their downward trend. They argue the package will raise the U.S. government's
deficit to $11.3 trillion and undermine the credibility of the world's biggest
economy.
Financial turmoil in the U.S. has now spilled over into Asian and European
markets, pushing governments there to come up with hastily produced measures to
buttress their financial institutions and guarantee bank deposits.
Skeptical investors, meanwhile, continue to dump stocks and banks are refraining
from lending money to secure their cash flow.
"Recent events have underlined the vulnerability of emerging economies to
turbulence in advanced financial markets," the IMF said. "Emerging and developing
economies will continue to face difficult external financing conditions, and
those with large current account deficits or other vulnerabilities will remain
under the most pressure."
The lending agency slashed China's growth forecast for next year by 0.5
percentage point to 9.3 percent. India's economy is expected to grow 6.9 percent
next year, down 1.1 percent from an earlier IMF estimate.
The IMF predicted the U.S. housing market "could deteriorate for longer than
envisaged, and European housing markets could weaken more broadly."
"Against this backdrop, the baseline projections show the global economy
undergoing a major downturn, with growth falling to its slowest pace since the
2001-2002 recession," it said. "A gradual recovery is projected to get under way
later in 2009, but global growth is not expected to return to trend until 2010."
Inflation risks to growth are now more balanced, it said, citing falling oil and
other commodity prices and the expected slower growth of the global economy.
The IMF advised policymakers around the world to focus on "stabilizing global
financial markets, while nursing their economies through a global downturn and
tight credit and ensuring that the recent rise in inflation is reversed."
"Work must also progress on tackling the market and regulatory flaws that have
contributed to recent stresses," the IMF said.
It also stressed the need to ensure trade and financial integration of the global
economy to guarantee longer-term growth prospects despite the current global
financial turmoil.
hdh@yna.co.kr
(END)
WASHINGTON, Oct. 8 (Yonhap) -- The International Monetary Fund (IMF) Wednesday lowered its growth predictions for South Korea next year to 3.5 percent, citing the U.S.-sparked financial crisis spreading across Asia and Europe.
In its July forecast the IMF predicted South Korea's economy would grow 4.3
percent in 2009, saying the country's economy and those of its major trading
partners could regain momentum early next year.
Predictions for this year's growth remained unchanged from the July forecast at
4.1 percent.
South Korean President Lee Myung-bak campaigned late last year on a pledge to
achieve 7 percent annual growth for the world's 13th largest economy. Seoul
officials have since lowered the figure to 6 percent, citing the adverse external
environment. South Korea's economy grew 5 percent last year.
The IMF also lowered this year's growth predictions for the global economy to 3.9
percent from 4.1 percent projected three months earlier, and downgraded next
year's growth estimate to 3 percent from its earlier forecast of 3.9 percent. The
growth rate for 2007 stood at 5 percent.
The U.S. economy, meanwhile, is projected to grow by 1.6 percent this year and by
a mere 0.1 percent next year, according to the IMF.
"These projections are well below those provided in the July 2008 World Economic
Outlook Update, reflecting increasing evidence in recent months of slowing
activity, the further burgeoning of the financial crisis, and a heightened
appreciation of the degree to which financial deleveraging is likely to be an
extended constraint on growth," the IMF said in a semiannual World Economic
Outlook.
The statements came as the Dow Jones Industrial average plummeted on Tuesday to
9447.11 points after several straight days of steep losses as investors remain
skeptical about the viability of the U.S.$700 billion bailout package signed by
U.S. President George W. Bush last week.
The unprecedented bailout plan came in response to the collapse of several major
U.S. financial institutions impacted by the subprime mortgage crisis and
subsequent credit crunch.
Critics say the biggest government intervention since the Great Depression will
not solve the problem caused by the "asset bubble" unless housing prices stop
their downward trend. They argue the package will raise the U.S. government's
deficit to $11.3 trillion and undermine the credibility of the world's biggest
economy.
Financial turmoil in the U.S. has now spilled over into Asian and European
markets, pushing governments there to come up with hastily produced measures to
buttress their financial institutions and guarantee bank deposits.
Skeptical investors, meanwhile, continue to dump stocks and banks are refraining
from lending money to secure their cash flow.
"Recent events have underlined the vulnerability of emerging economies to
turbulence in advanced financial markets," the IMF said. "Emerging and developing
economies will continue to face difficult external financing conditions, and
those with large current account deficits or other vulnerabilities will remain
under the most pressure."
The lending agency slashed China's growth forecast for next year by 0.5
percentage point to 9.3 percent. India's economy is expected to grow 6.9 percent
next year, down 1.1 percent from an earlier IMF estimate.
The IMF predicted the U.S. housing market "could deteriorate for longer than
envisaged, and European housing markets could weaken more broadly."
"Against this backdrop, the baseline projections show the global economy
undergoing a major downturn, with growth falling to its slowest pace since the
2001-2002 recession," it said. "A gradual recovery is projected to get under way
later in 2009, but global growth is not expected to return to trend until 2010."
Inflation risks to growth are now more balanced, it said, citing falling oil and
other commodity prices and the expected slower growth of the global economy.
The IMF advised policymakers around the world to focus on "stabilizing global
financial markets, while nursing their economies through a global downturn and
tight credit and ensuring that the recent rise in inflation is reversed."
"Work must also progress on tackling the market and regulatory flaws that have
contributed to recent stresses," the IMF said.
It also stressed the need to ensure trade and financial integration of the global
economy to guarantee longer-term growth prospects despite the current global
financial turmoil.
hdh@yna.co.kr
(END)
