S. Korea's economy to rebound fastest among major countries: World Bank

(ATTN: ADDS outlooks for 2010 in 5th para)
By Koh Byung-joon
SEOUL, June 22 (Yonhap) -- South Korea's economy is expected to rebound the
fastest among the world's major countries, and could grow 4 to 5 percent in 2011
should a global recovery take hold, a senior official at the World Bank said
Monday.

The Washington-based organization predicted, however, that a sustainable rebound
for South Korea's economy, Asia's fourth-largest, will depend on a resumption of
global growth.
"Korea is indeed likely to recover fastest among the OECD countries partly
because it was in good macroeconomic health before the crisis and because the
country has close linkage with China," Justin Yifu Lin, World Bank chief
economist and senior vice president, told Yonhap News Agency.
"We expect Korea's gross domestic product will decline by 3 to 3.5 percent for
2009 as a whole. Then, should a global recovery take hold, the Korean economy is
likely to grow by 4 to 5 percent by 2011," he added.
Without offering further details on next year's GDP in the interview, Lin,
attending an international conference here in Seoul hosted by the World Bank and
Seoul's finance ministry, said growth will likely return to 2 percent in 2010
despite the fact that high-levels of uncertainty remain.
Buffeted by a protracted global downturn, South Korea's economy is feared to
contract 2.4 percent this year, the first minus growth since the 1997-98 Asian
financial meltdown, according to the latest prediction by the central bank. For
next year, it is expected to rebound by around 4 percent.
The Seoul 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.
Lin said the first-quarter rebound is attributed in part to the government-led
stimulus measures but added that it is also linked to growing demand from China,
where government-led pump-priming measures and rising investment have begun to
improve market conditions.
"In addition to the effect of Korea's own fiscal stimulus, the recovery of the
first quarter of 2009 is also related to rising import demand from China as the
effects of the nation's large fiscal stimulus and strong investment began to take
hold," Lin explained.
"The hope for the mid-term is that China's strong investment growth will have the
same effect it has had in the recent past and drive the recovery of export and
industrial production in Korea, Japan, Taiwan and other East Asian countries," he
added.
kokobj@yna.co.kr
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