ID :
67663
Thu, 06/25/2009 - 19:33
Auther :
Shortlink :
https://oananews.org//node/67663
The shortlink copeid
S. Korea revises up 2009 growth outlook on improving indicators
By Koh Byung-joon
SEOUL, June 25 (Yonhap) -- South Korea's economy is expected to shrink 1.5
percent this year, the Seoul government predicted Thursday, revising up its
earlier forecast as signs emerged that a downturn is abating thanks to massive
state-led stimulus measures.
The government also forecast the nation's gross domestic product will rebound to
a 4 percent expansion in 2010, but added it will stick to its "expansionary"
economic policy as it is "premature" to say that the economy is making a full
recovery.
The 2009 growth projection is better than a 2 percent contraction predicted in
April, but it still reflects a sharp turnaround from a 2.2 percent advance for
last year. The outlook for 2010 remained the same as what was suggested two
months ago.
"The steep downturn in our country is showing signs of abating earlier than other
countries, with some indicators making improvements," the Ministry of Strategy
and Finance said in a report.
"Industrial output is picking up and consumer and business sentiment is also
improving fast, indicating that growth for the second quarter will be higher than
we earlier predicted," it added.
The latest assessment comes amid budding signs that the economy's worst downturn
in over a decade may be nearing an end following the global financial and
economic turbulence that started last summer.
To keep Asia's fourth-largest economy from going into a tailspin, the government
has been pushing to stimulate domestic demand by cutting taxes and expanding
fiscal spending, including a 28.4 trillion won extra budget.
The Bank of Korea, the nation's central bank, has for several months kept its key
interest rate at a record low of 2 percent in a bid to boost the slumping
economy.
South Korea managed to avert a technical recession in the first quarter by
growing 0.1 percent from three months earlier, after falling 5.1 percent in the
last quarter of 2008.
On Wednesday, the Organization for Economic Cooperation and Development said that
the South Korean economy will grow 3.5 percent next year after contracting 2.2
percent this year, making the fastest rebound among its 30 member countries.
The International Monetary Fund plans to upgrade its outlook for South Korea in a
report to be unveiled soon, its senior economist told a conference in Seoul on
the same day.
Despite growing optimism, the ministry underlined that a number of downside risks
remain, saying employment and corporate investment continue to be in slump as
companies suffer from low profitability and high debt ratios amid a protracted
global slowdown.
The ministry forecast that job markets will remain sluggish due to a hesitancy to
hire workers amid cloudy business outlooks.
The economy will lose around 100,000 to 150,000 jobs annually this year, it
added. That is a more hopeful outlook than the ministry gave in April, when it
predicted a cut of 150,000 positions.
Facility investment is expected to plunge 18 percent this year, while private
consumption will decline 1.8 percent compared with a 0.9 percent expansion a year
earlier.
The ministry predicted exports, South Korea's key growth engine, will contract 16
percent this year from a year earlier. As imports will likely decline further,
however, the ministry expected the nation's current account surplus could hit $25
billion for this year.
The ministry said that "it is still early to say that the rebound is in
full-swing," attributing its cautious stance to bleak business conditions
overseas and recently rising oil prices. South Korea is the world's fifth-largest
oil importer.
"We will keep our expansionary economic policy for the time being until the
private sector is capable of recovering on its own. We will also execute our
spending plan with the extra budget and maintain our active fiscal and financial
roles," the ministry said.
As for growing concerns over a fiscal deficit amid the government-led stimulus
drive, the ministry said that it will intensify efforts to balance the country's
budget in the mid term by solidifying its tax revenue base and spending
carefully.
The ministry emphasized the need to beef up the nation's growth potential to
prepare for the post-crisis era. It recommended increasing research and
development investment, making inroads into eco-friendly industries and expanding
free trade with large economic blocs and resource-rich countries.
kokobj@yna.co.kr
(END)
SEOUL, June 25 (Yonhap) -- South Korea's economy is expected to shrink 1.5
percent this year, the Seoul government predicted Thursday, revising up its
earlier forecast as signs emerged that a downturn is abating thanks to massive
state-led stimulus measures.
The government also forecast the nation's gross domestic product will rebound to
a 4 percent expansion in 2010, but added it will stick to its "expansionary"
economic policy as it is "premature" to say that the economy is making a full
recovery.
The 2009 growth projection is better than a 2 percent contraction predicted in
April, but it still reflects a sharp turnaround from a 2.2 percent advance for
last year. The outlook for 2010 remained the same as what was suggested two
months ago.
"The steep downturn in our country is showing signs of abating earlier than other
countries, with some indicators making improvements," the Ministry of Strategy
and Finance said in a report.
"Industrial output is picking up and consumer and business sentiment is also
improving fast, indicating that growth for the second quarter will be higher than
we earlier predicted," it added.
The latest assessment comes amid budding signs that the economy's worst downturn
in over a decade may be nearing an end following the global financial and
economic turbulence that started last summer.
To keep Asia's fourth-largest economy from going into a tailspin, the government
has been pushing to stimulate domestic demand by cutting taxes and expanding
fiscal spending, including a 28.4 trillion won extra budget.
The Bank of Korea, the nation's central bank, has for several months kept its key
interest rate at a record low of 2 percent in a bid to boost the slumping
economy.
South Korea managed to avert a technical recession in the first quarter by
growing 0.1 percent from three months earlier, after falling 5.1 percent in the
last quarter of 2008.
On Wednesday, the Organization for Economic Cooperation and Development said that
the South Korean economy will grow 3.5 percent next year after contracting 2.2
percent this year, making the fastest rebound among its 30 member countries.
The International Monetary Fund plans to upgrade its outlook for South Korea in a
report to be unveiled soon, its senior economist told a conference in Seoul on
the same day.
Despite growing optimism, the ministry underlined that a number of downside risks
remain, saying employment and corporate investment continue to be in slump as
companies suffer from low profitability and high debt ratios amid a protracted
global slowdown.
The ministry forecast that job markets will remain sluggish due to a hesitancy to
hire workers amid cloudy business outlooks.
The economy will lose around 100,000 to 150,000 jobs annually this year, it
added. That is a more hopeful outlook than the ministry gave in April, when it
predicted a cut of 150,000 positions.
Facility investment is expected to plunge 18 percent this year, while private
consumption will decline 1.8 percent compared with a 0.9 percent expansion a year
earlier.
The ministry predicted exports, South Korea's key growth engine, will contract 16
percent this year from a year earlier. As imports will likely decline further,
however, the ministry expected the nation's current account surplus could hit $25
billion for this year.
The ministry said that "it is still early to say that the rebound is in
full-swing," attributing its cautious stance to bleak business conditions
overseas and recently rising oil prices. South Korea is the world's fifth-largest
oil importer.
"We will keep our expansionary economic policy for the time being until the
private sector is capable of recovering on its own. We will also execute our
spending plan with the extra budget and maintain our active fiscal and financial
roles," the ministry said.
As for growing concerns over a fiscal deficit amid the government-led stimulus
drive, the ministry said that it will intensify efforts to balance the country's
budget in the mid term by solidifying its tax revenue base and spending
carefully.
The ministry emphasized the need to beef up the nation's growth potential to
prepare for the post-crisis era. It recommended increasing research and
development investment, making inroads into eco-friendly industries and expanding
free trade with large economic blocs and resource-rich countries.
kokobj@yna.co.kr
(END)
