Economic outlook still murky: bank heads

By Kim Soo-yeon
SEOUL, June 19 (Yonhap) -- A freefall in South Korea's economy has stopped but it
is difficult to predict its future path, bank heads here said Friday.

"A downturn in the Korean economy seems have stopped, but as this mainly resulted
from aggressive fiscal spending and monetary policies, it is considerably hard to
predict how the economy will perform down the road," said a statement released
after Bank of Korea (BOK) Gov. Lee Seong-tae met with the heads of seven local
banks.
BOK Gov. Lee said in a June rate-setting meeting that the freefall in Asia's
fourth-largest economy is almost over, but it is premature to say that the local
economy will continue improving after the second half.
Budding signs of economic improvement are reinforcing optimism that the Korean
economy may be approaching its bottom.
The Korean economy grew 0.1 percent in the first quarter from three months
earlier, averting a technical recession, or two straight quarters of contraction.
The Korean economy shrank 5.1 percent in the last quarter of 2008.
But some data show economic activity remains sluggish, reinforcing cautious views
by the government and the BOK.
South Korea's job loss accelerated at the fastest pace in more than a decade in
May amid the slowdown.
On June 11, the BOK froze its key interest rate at a record low of 2 percent for
the fourth straight month, saying that a freefall in the local economy has
stopped. Between October and February, the bank had made six consecutive rate
cuts totaling 3.25 percentage points.
sooyeon@yna.co.kr
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