ID :
70300
Tue, 07/14/2009 - 15:06
Auther :
Shortlink :
https://oananews.org//node/70300
The shortlink copeid
Korea`s potential growth rate seen to fall to 3-pct band
SEOUL, July 14 (Yonhap) -- South Korea's potential economic growth rate is likely
to fall to the 3-percent range this year because of flaccid corporate investment
and consumer spending, economists said Tuesday.
The nation's potential growth rate, or the maximum possible rate at which an
economy can grow without triggering inflation, had remained in the range of 4.5-5
percent until 2007.
"A possible fall in the potential growth rate is mainly due to lackluster
corporate capital expenditures and consumer spending," said Hwang In-seong, an
economist at Samsung Economic Research Institute.
Yu Byoung-gyu, executive director at Hyundai Research Institute, said that if
consumption and corporate spending continue to shrink next year, the potential
growth rate is feared to fall to the 2-percent range.
Despite some indicators pointing to the bottoming-out of Asia's fourth-largest
economy, policymakers are still cautious about the pace of economic recovery
because of weak investment and a tight job market.
On Friday, the Bank of Korea (BOK), the country's central bank, upgraded its
growth outlook for the Korean economy to a 1.6 percent contraction this year,
from an earlier estimate of a 2.4 percent fall. The government forecast the local
economy would fall 1.5 percent in 2009, up from its previous projection of a 2
percent decline.
Despite the upgrade in the economic outlook, the BOK said uncertainties linger
over the growth path as a run-up in oil prices and the waning effects of a set of
stimulus packages may serve as downside risks to growth.
According to the BOK, facility investment amounted to 17.7 trillion won (US$13.6
billion) in the first quarter, down 22.1 percent from the previous year and
marking the worst performance since 2001. The central bank said corporate
investment is expected to tumble 15.1 percent this year.
Experts say that to boost the potential growth rate, the government should ease
regulations to lure companies into making investments and focus on nurturing
research and development in a bid to enhance productivity.
sooyeon@yna.co.kr
(END)
to fall to the 3-percent range this year because of flaccid corporate investment
and consumer spending, economists said Tuesday.
The nation's potential growth rate, or the maximum possible rate at which an
economy can grow without triggering inflation, had remained in the range of 4.5-5
percent until 2007.
"A possible fall in the potential growth rate is mainly due to lackluster
corporate capital expenditures and consumer spending," said Hwang In-seong, an
economist at Samsung Economic Research Institute.
Yu Byoung-gyu, executive director at Hyundai Research Institute, said that if
consumption and corporate spending continue to shrink next year, the potential
growth rate is feared to fall to the 2-percent range.
Despite some indicators pointing to the bottoming-out of Asia's fourth-largest
economy, policymakers are still cautious about the pace of economic recovery
because of weak investment and a tight job market.
On Friday, the Bank of Korea (BOK), the country's central bank, upgraded its
growth outlook for the Korean economy to a 1.6 percent contraction this year,
from an earlier estimate of a 2.4 percent fall. The government forecast the local
economy would fall 1.5 percent in 2009, up from its previous projection of a 2
percent decline.
Despite the upgrade in the economic outlook, the BOK said uncertainties linger
over the growth path as a run-up in oil prices and the waning effects of a set of
stimulus packages may serve as downside risks to growth.
According to the BOK, facility investment amounted to 17.7 trillion won (US$13.6
billion) in the first quarter, down 22.1 percent from the previous year and
marking the worst performance since 2001. The central bank said corporate
investment is expected to tumble 15.1 percent this year.
Experts say that to boost the potential growth rate, the government should ease
regulations to lure companies into making investments and focus on nurturing
research and development in a bid to enhance productivity.
sooyeon@yna.co.kr
(END)
