S. Korean economy to contract 1.7 pct this year: think tank

SEOUL, June 21 (Yonhap) -- South Korea's economy is expected to shrink 1.7
percent this year as exports remain weak and fiscal spending decreases down the
road, a local think tank forecast Sunday.
According to the LG Economic Research Institute, the Korean economy, Asia's
fourth-largest, is expected to grow 0.3 percent year-on-year in the second half
of the year, after an estimated contraction of 3.6 percent in the first half.
The economy is projected to expand 3.6 percent next year, it said.
"A full recovery of exports is unlikely this year due to a strong local currency
and weak demand from major economies such as the U.S.," the institute said.
"Also, fiscal spending was front-loaded in the first half, which means fiscal
spending will decrease down the road."
The economy shrank 5.1 percent on-year in the final quarter of 2008, the worst
performance in 11 years. But it narrowly averted a recession, two consecutive
quarter-to-quarter contractions, by posting a mild expansion in the first quarter
of the year.
The economy grew 0.1 percent on-quarter in the January-March period on the
government's fiscal spending and rate cuts. But from a year earlier, the
country's economy contracted 4.2 percent in the first quarter, according to the
Bank of Korea.
sam@yna.co.kr
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