(Yonhap Interview) Korea won`t face double dip, job conditions to pick up in H2: finance minister

By Koh Byung-joon
SEOUL, April 27 (Yonhap) -- South Korea's economy will not likely fall into a
"double dip" despite its possibly moderating pace of growth in months to come
because the overall economic outlook remains robust, Seoul's top financial and
economic policymaker said.
The stagnant job market situation is also expected to improve in the second half,
Finance Minister Yoon Jeung-hyun told Yonhap News Agency, though he conditioned
the recovery on economic growth and the performance of the private sector.
"Though the pace of economic growth for South Korea is expected to moderate a
little in the latter part of this year, following earlier sharp growth, the
overall expansion trend will likely continue." Yoon said. "There is no
possibility that the economy will fall into a double dip because the economic
outlook remains bright, as suggested by many investor banks and think tanks."
Yoon was speaking after attending a meeting of finance ministers and central bank
governors from the Group of 20 leading and emerging economies, and subsequent
gathering of the International Monetary Fund in Washington on Friday and
Saturday.
Yoon's comments come after the IMF said in an interview with Yonhap last week
that Korea's economy might see its economic growth slow in the second half,
causing some skeptics to express anxiety over a double dip, or a downturn after a
short-lived economic rebound. The global lending body retained Korea's growth
projection of 4.5 percent for this year.
"We should remain cautious against groundless optimism, but at the same time we
should guard against groundless pessimism as well," the finance minister said.
"The government's 5 percent growth projection for this year is very conservative
compared with 5.5 percent and 5.2 percent expansions forecast by the Korea
Development Institute and the Bank of Korea."
Discussing overall job market conditions, Yoon said that sluggish employment is a
"common agony shared by the world," citing reluctance by companies to hire
workers as a key reason behind the slumping recovery.
"Basically, employment conditions improve when the private sector regains its
capacity for self-sufficiency. Even if the government keeps providing support,
job creation occurs when companies believe that they can recoup recruitment costs
plus alpha by hiring additional workers," Yoon said. "After all, companies create
jobs. The government cannot play a leading role in offering work."
He said that the government should play a role in bolstering the job market by
expanding the overall market for South Korean firms while encouraging the
development of domestic economic activity, streamlining regulations and boosting
the service industry, which can generate jobs with relatively little investment.
Yoon painted a somewhat optimistic view of labor market conditions in months to
come. "If I have to say, I think that things will improve starting in the second
half, based on the assumption that overall economic conditions improve as
expected," he said.
Speaking about the financial difficulty in Greece, which recently asked for a
bailout from other euro-zone countries and the IMF, Yoon expressed confidence
that Europe will be able to handle the debt problem. He also dismissed concerns
of a spillover impact on South Korea, saying any such effects would be "limited."
"It will take some time before the Greek crisis subsides, but I believe that the
European countries are capable of resolving the issue on their own," Yoon said.
"Their problem would affect our economy only if things got out of control enough
to rattle the worldwide economy, but that seems very unlikely to happen."
As he discussed the IMF's involvement in the Greek bailout, the minister urged
the global lending body to make efforts to erase its "stigmatizing impact" on
borrowers. He cited South Korea's own experience a decade ago when it had to ask
for help from the IMF to keep its economy alive.
"When we received the IMF bailout fund, we were forced to take extreme
belt-tightening measures, which forced many companies to close down. The IMF
later acknowledged its mistake and eased such measures, helping us regain
liquidity in our economy," Yoon said. "But in the process, people got this
stigma, (that it would be) horrifying to borrow money from the IMF."
Asked whether the government will introduce a tax on non-deposit debts including
foreign borrowing by financial institutions, a proposal recently made by a
presidential advisor, Yoon said that the government is exploring diverse options,
including that one. He added that details will be determined based on discussion
between the G-20 members and an evaluation of its local impact.
The proposed global bank tax is aimed at making banks and other financial
institutions accused of causing market chaos pay for their disruption. The idea
has drawn keen attention, with some arguing it could prevent another crisis and
help nations deal with future financial turmoil.
The G-20 officials, however, failed to produce a conclusion during last week's
meeting in Washington. They promised to discuss it again in a June meeting based
on a report that the IMF has been asked to submit by that time.
kokobj@yna.co.kr
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