ID :
26495
Sat, 10/25/2008 - 14:00
Auther :
Shortlink :
https://www.oananews.org//node/26495
The shortlink copeid
S. Korea's economic growth to slow further in Q4: Moody's
SEOUL, Oct. 24 (Yonhap) -- South Korea's economy is expected to slow further in the fourth quarter of this year as the nation is currently undergoing a "mini-financial crisis," a research unit of Moody's Investors Service said Friday.
South Korea should lower its key interest rate to 4 percent from the current 5
percent by the middle of next year as the current economic conditions require a
"rapid" easing in its monetary policy, Moody's Economy.com said in an e-mailed
statement.
South Korea's central bank announced earlier in the day that the country's gross
domestic product expanded 0.6 percent on-quarter in the July-September period,
the slowest pace in four years. The data has stoked fears that the nation might
be slipping into an economic recession.
"Unfortunately, worse is yet to come for Korea with growth likely to dip further
in the final quarter of 2008," said Daniel Melser, a Sydney-based economist at
Economy.com. "The state of the economy demands a rapid easing in monetary policy
from the Bank of Korea."
Melser said that South Korea is facing "stern challenges" across the board,
citing banks' struggle to roll-over overseas debts. He also said small- and
medium-sized companies are under pressure from declining demand and rising import
costs, caused by the nation's sliding currency.
"Korean policy makers have a devil of a job at present with the growth crunch set
against a backdrop of still high inflation and a mini-financial crisis," Melser
added.
South Korea's consumer prices eased to 5.1 percent in September from a 10-year
peak of 5.9 percent in July due to recent drops in crude oil prices.
Fears are also growing as Korea's financial market is showing few signs of
stabilization despite the government's recently stepped-up measures, including a
US$130 billion bank rescue package mostly aimed at providing state guarantees for
foreign debts owed by local banks.
The local currency and stock markets have continued to lose ground since the
collapse of major American investment banks last month. The won has lost around
35 percent and the KOSPI has almost halved so far this year.
South Korea should lower its key interest rate to 4 percent from the current 5
percent by the middle of next year as the current economic conditions require a
"rapid" easing in its monetary policy, Moody's Economy.com said in an e-mailed
statement.
South Korea's central bank announced earlier in the day that the country's gross
domestic product expanded 0.6 percent on-quarter in the July-September period,
the slowest pace in four years. The data has stoked fears that the nation might
be slipping into an economic recession.
"Unfortunately, worse is yet to come for Korea with growth likely to dip further
in the final quarter of 2008," said Daniel Melser, a Sydney-based economist at
Economy.com. "The state of the economy demands a rapid easing in monetary policy
from the Bank of Korea."
Melser said that South Korea is facing "stern challenges" across the board,
citing banks' struggle to roll-over overseas debts. He also said small- and
medium-sized companies are under pressure from declining demand and rising import
costs, caused by the nation's sliding currency.
"Korean policy makers have a devil of a job at present with the growth crunch set
against a backdrop of still high inflation and a mini-financial crisis," Melser
added.
South Korea's consumer prices eased to 5.1 percent in September from a 10-year
peak of 5.9 percent in July due to recent drops in crude oil prices.
Fears are also growing as Korea's financial market is showing few signs of
stabilization despite the government's recently stepped-up measures, including a
US$130 billion bank rescue package mostly aimed at providing state guarantees for
foreign debts owed by local banks.
The local currency and stock markets have continued to lose ground since the
collapse of major American investment banks last month. The won has lost around
35 percent and the KOSPI has almost halved so far this year.
