ID :
208387
Tue, 09/20/2011 - 19:48
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https://www.oananews.org//node/208387
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IMF cuts S. Korean economic growth outlook to 4 percent(UPDATE)
By Lee Chi-dong
WASHINGTON, Sept. 20 (Yonhap) -- The International Monetary Fund (IMF) said Tuesday that South Korea's economy is projected to grow 4 percent this year, lower than its April estimate of 4.5 percent, citing the "unusual uncertainty in the external environment."
In a regular report on the global economy released ahead of the World Bank/IMF Annual Meetings later this week, the Washington-based organization also lowered its growth outlook for the 2011 global economy from 4.3 percent to 4 percent, citing increased downside risks.
Advanced economies such as the U.S. and the European Union have been slower than expected in their economic recovery amid persistent budget woes. The IMF slashed its growth outlook for the advanced economies this year from 2.2 percent to 1.6 percent in the updated report.
South Korean officials said the cut in the prospects for Asia's fourth-largest economy seems to be attributable to the troubles in the advanced economies. South Korea's economy is heavily dependent on exports.
The IMF advised South Korea to seek exchange rate flexibility to help curb short-term external liabilities.
It also said South Korea needs to sustain monetary tightening.
Elaborating on its view on Asia, the IMF grouped South Korea and China as current account surplus economies that have "moved less than those in deficit economies" in terms of real effective exchange rates.
"For these economies, a stronger exchange rate, combined with structural reforms, would raise domestic purchasing power and allow external rebalancing, while also containing inflation pressure," it said.
It said South Korea will also be able to "slow the pace of debt-creating capital inflows and the buildup of short-term external liabilities."
The IMF expects South Korea's consumer prices to rise 4.5 percent this year.
In South Korea, India and Vietnam, according to the IMF, the real cost of capital is at historical lows because of elevated inflation in spite of nominal policy rate hikes.
"Inflation expectations are inching up," added the IMF. "In these economies, the monetary tightening phase needs to be sustained for as long as the baseline scenario prevails."
The IMF said global economic activity has markedly slowed mainly due to troubles in major economies such as the U.S. and the European Union and financial instability has renewed.
It said there are "accumulating signs of weakness in key advanced economies."
WASHINGTON, Sept. 20 (Yonhap) -- The International Monetary Fund (IMF) said Tuesday that South Korea's economy is projected to grow 4 percent this year, lower than its April estimate of 4.5 percent, citing the "unusual uncertainty in the external environment."
In a regular report on the global economy released ahead of the World Bank/IMF Annual Meetings later this week, the Washington-based organization also lowered its growth outlook for the 2011 global economy from 4.3 percent to 4 percent, citing increased downside risks.
Advanced economies such as the U.S. and the European Union have been slower than expected in their economic recovery amid persistent budget woes. The IMF slashed its growth outlook for the advanced economies this year from 2.2 percent to 1.6 percent in the updated report.
South Korean officials said the cut in the prospects for Asia's fourth-largest economy seems to be attributable to the troubles in the advanced economies. South Korea's economy is heavily dependent on exports.
The IMF advised South Korea to seek exchange rate flexibility to help curb short-term external liabilities.
It also said South Korea needs to sustain monetary tightening.
Elaborating on its view on Asia, the IMF grouped South Korea and China as current account surplus economies that have "moved less than those in deficit economies" in terms of real effective exchange rates.
"For these economies, a stronger exchange rate, combined with structural reforms, would raise domestic purchasing power and allow external rebalancing, while also containing inflation pressure," it said.
It said South Korea will also be able to "slow the pace of debt-creating capital inflows and the buildup of short-term external liabilities."
The IMF expects South Korea's consumer prices to rise 4.5 percent this year.
In South Korea, India and Vietnam, according to the IMF, the real cost of capital is at historical lows because of elevated inflation in spite of nominal policy rate hikes.
"Inflation expectations are inching up," added the IMF. "In these economies, the monetary tightening phase needs to be sustained for as long as the baseline scenario prevails."
The IMF said global economic activity has markedly slowed mainly due to troubles in major economies such as the U.S. and the European Union and financial instability has renewed.
It said there are "accumulating signs of weakness in key advanced economies."
