S. Korea’s economy expected to grow over 4 pct next year: finance minister
S. Korea’s economy expected to grow over 4 pct next year: finance minister
SEOUL, Nov. 19 (Yonhap) — South Korea’s economy is expected to grow above the government’s earlier forecast next year because it is quickly rebounding from a steep downturn, Seoul’s top financial policymaker said Thursday.
“Many foreign institutions are expressing their surprise over our economy’s faster-than-expected rebound… It is expected that next year’s growth will likely be better than the government’s earlier forecast of a 4-percent expansion,” Finance Minister Yoon Jeung-hyun told a meeting of heads from major private and state-run think tanks.
Yoon said the nation’s economy is faring well and that growth has returned to pre-crisis levels, but noted that downside risks remain, including a tightened labor market and rising commodity prices.
“While some macroeconomic indicators are improving, employment conditions still remain sluggish, making it difficult for ordinary people in their daily life,” the minister said. “With a rebounding economy, oil prices and other commodity costs could surge at anytime, which could serve as yet another drag on the economy.”
His comments came as the economy has made a robust rebound in recent months, following the worst downturn in more than a decade, thanks to government-led stimulus measures including tax cuts and increased fiscal spending.
South Korea has unveiled diverse economic stimulus measures by frontloading its budget, reducing taxes and keeping its key interest rate at a record-low level — efforts aimed at bolstering domestic demand and kick-starting the sluggish economy.
According to the nation’s central bank, gross domestic product grew 2.9 percent in the third quarter from three months earlier, a marked turnaround from a 5.1 percent plunge in the final quarter of last year.
But the government has cautioned against premature optimism, and has said it will continue its fiscal support to bolster the economy.
“To get over a crisis and prepare for the post-crisis era, now is a really critical time for us to delve into how we survive this difficult time and keep the improving economic trend alive,” Yoon said during the meeting.
Heads of the nation’s nine economic think tanks who attended the closed-door gathering shared the view that the local economy is recovering at a faster-than-expected pace, according to finance ministry officials.
They still called for the government to stick to its expansionary macroeconomic policy stance “for the time being” and push for exit strategies aimed at normalizing measures after monitoring overall economic conditions.
But the participants were divided on how fast the global economy will rebound, citing diverse downside risks such as a possibly delayed recovery in advanced countries. But they ruled out a double dip recession in the global economy, the officials added.
Thursday’s meeting comes as the government is busy crafting its annual economy-operation plan for next year, which is to be unveiled on Dec. 10. The government currently anticipates that the economy will contract 1.5 percent this year before rebounding 4 percent next year. (Yonhap)
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on Nov 19 2009. Filed under Asia.
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