Too early to discuss 'exit strategies' for S. Korean economy: trade agency

By Koh Byung-joon
SEOUL, June 22 (Yonhap) -- It is premature to talk about "exit strategies"
intended to absorb excess market liquidity unleashed in the process of bolstering
the economy before external market conditions improve, the head of South Korea's
trade agency said Monday.
"The current improving mood in South Korea is largely due to government-led
stimulus measures taken from November last year," Sakong Il, chairman of the
Korea International Trade Association, told a press conference on the sidelines
of an international conference co-hosted by the finance ministry and the World
Bank.
"Those measures have begun to show their effect, which will help the local
economy rebound faster than other countries. Still, it is too early to talk about
exit strategies now as our economy depends heavily on outside factors. An
economic recovery will be sustainable when outside conditions improve," he added.
His remarks are in line with the government's repeated affirmation that it will
stick to its expansionary macroeconomic policy stance for the time being as more
time will be needed before a full-swing economic rebound takes hold.
Seoul 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.
Joining the government efforts to bolster the economy, the central bank has made
six consecutive interest rate cuts totaling 3.25 percentage points since October.
As some indicators are showing that the economic downturn is easing, however,
experts have started to talk about so-called exit strategies, whereby liquidity
released into the market and other stimulus measures are rolled back for fear
that if left in place they could cause a bubble and wreak further havoc on the
local economy down the road.
kokobj@yna.co.kr
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