Major think tanks call for gov`t to stick to current economic policy

By Koh Byung-joon
SEOUL, June 18 (Yonhap) -- The heads of South Korea's major economic think tanks
said Thursday the government should maintain its current economic policy stance
"for the time being," fearing more time is needed to see an economic recovery.
The opinions were expressed during a closed-door meeting between 10 economic
think tank chiefs and Finance Minister Yoon Jeung-hyun in central Seoul held to
exchange opinions on the nation's future economic polices.
The meeting, the second of its kind since Yoon took office, came as the
government planned to announce its broad economic policy direction for the second
half next week.
"Currently, it is quite difficult to figure out what will unfold in the second
half. If (the government) changes its policy stance hastily, it could undermine
the growth trend, and if it drags its feet too long, that would cause other
problems such as inflation," a participant was quoted by the ministry as saying
during the meeting.
"As it is expected to take time to see an economic recovery materialize, we need
to stick to the current policy stance for the time being," he said.
The meeting lasted more than an hour and was attended by Hyun Oh-seok, head of
the state-run Korea Development Institute, Chae Wook, chairman of the Korea
Institute for International Economic Policy and top officials of other
private-sector research organizations including the Samsung Economic Research
Institute.
Their views were generally in line with earlier remarks made by Finance Minister
Yoon. He has repeatedly said that the government will continue its "expansionary"
macroeconomic policy stance, as the economy remains in a slump though the
downturn has recently eased.
South Korea's government has been pushing to stimulate domestic demand using
diverse measures including tax cuts and expanded fiscal spending, as exports, one
of the nation's key growth engines, show few signs of perking up amid a
protracted global slowdown.
The nation's economy managed to avert a technical recession as its gross domestic
product rose 0.1 percent in the first quarter from three months earlier, after
falling 5.1 percent in the last quarter of 2008, according to the central bank.
Opinions are still divided over the pace of the economic recovery, with some
saying the worst might be over and others countering that it will take more time
to see a meaningful rebound.
Yoon has expressed "cautious optimism," saying that it is premature to predict an
imminent recovery as positives and negatives currently coexist.
The meeting's participants agreed with his assessment, saying the steep economic
downturn has been easing but that being overly optimistic would be premature and
citing gloomy outlooks for overseas markets that will affect exports, according
to the ministry.
They also feared that oil prices, which recently grew at a fast clip, could keep
on an upward trend and have a negative impact on the local economy, according to
the ministry. South Korea imports most of its energy needs.
kokobj@yna.co.kr
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