(News Focus) Talk of early economic upturn premature: economists

By Park Bo-ram
SEOUL, June 5 (Yonhap) -- A spate of positive data on domestic spending is
sparking optimism for an economic recovery in the offing, but analysts warned
Friday talk of an early economic upturn is premature as exports and employment
still remain fragile.
South Koreans' credit card spending, a key indicator of local demand, rose 8.66
percent from a year earlier in May since hitting a mere 3.89 on-year growth in
January, according to the Credit Finance Association of Korea.
Solid sales at the country's major department stores and auto sales in May added
to the growing recovery optimism. Lotte Department Store's sales increased 7
percent on-year last month while its smaller rival Shinsegae reported a
8.1-percent rise. Car sales climbed 31.7 percent in May from the previous month.
The central bank's index for consumer sentiment also hit a nearly two-year high
in May with its index recording 105.
The financial markets have also gained sharply so far this year. The country's
key stock index the KOSPI has risen 23 percent so far this year while the local
currency has strengthened almost 26 percent since hitting an 11-year low in early
March.
Experts, however, remained watchful of premature optimism, saying any talk of an
economic recovery is presumptious.
"Despite positive readings on sentiment indices, figures for the real economy
showed relatively poor progress," said Kim Sung-joo, at analyst at Daewoo
Securities Co.
Weighed down by weak overseas demand, South Korean exports fell 28.3 percent last
month, the fastest pace in four months, he pointed out.
The unemployment rate stood at 3.7 percent in May, the highest level since 2005
and worse than 3.2 percent the previous month, he said, citing goverment data.
The finance ministry also said on Thursday it is premature yet to expect an
economic revival due to unknown financial market uncertainties and climbing oil
prices.
pbr@yna.co.kr
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