Global IBs raise S. Korea's growth forecast for this year

SEOUL, June 20 (Yonhap) -- Seven global investment banks raised this month their
forecasts for South Korea's 2009 economic growth rate to an average of -2.5
percent from an earlier estimate of an average of -4.0 percent made in March,
financial industry sources said Saturday.

The banks are Morgan Stanly, Citigroup Inc., JP Morgan, Goldman Sachs, UBS,
Deutsche Bank and Credit Suisse.
The prediction came after the Organization for Economic Cooperation and
Development (OECD) said in a report early this month that South Korea's economy
has already bottomed out and is expected to recover at the fastest out of the
world's major countries.
In particular, JP Morgan estimated that the Korean economy is expected to
contract at an annualized rate of -1.8 percent in 2009, up from its earlier
projection of -2.8 percent made in March.
Goldman Sachs revised upward its forecast for the country's economic growth rate
for this year to -3.0 percent this year from an earlier prediction of -4.5
percent.
The upward revision for South Korea's 2009 economic growth rate will have a
positive impact to the inflow of global investment funds to the country, analysts
said.
"If global investment banks raise South Korea's economic growth forecast, it will
play a positive role in the country's economic recovery to a certain degree,"
said Lee Dong-soo, an analyst at Tong Yang Securities Inc.
Despite the improved outlook for economic growth, analysts remain cautious about
the prospects for the country's economy, as there are negative factors such as
the South Korean won's rise against the U.S. dollar and climbing crude prices.
"Though the Korean economy will likely continue to improve in the second half of
the year, it may lose upward momentum due to a fall in fiscal spending," Park
Hyeong-joong, an analyst at Woori Investment Securities Co.
Rising crude prices and increases in prices and property prices may be able to
curb the growth of the country's economy, he added.
ksnam@yna.co.kr
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