ID :
35910
Tue, 12/16/2008 - 15:23
Auther :
Shortlink :
https://www.oananews.org//node/35910
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S. Korea will strive for 3 pct growth in 2009
SEOUL, Dec. 16 (Yonhap) -- The South Korean government said Tuesday that it will strive for 3 percent economic growth in 2009 despite the worldwide slump in consumption, business investment and employment conditions.
In its economic management plan, the Ministry of Strategy and Finance said full
fledged stimulus programs including deregulation, tax cuts and increased state
spending should help to sustain growth in the new year. It said up to 65 percent
of next year's fiscal spending will be spent in the first six months.
The target is higher than the 2 percent gross domestic product (GDP) growth
forecasted by the Bank of Korea (BOK) last week, but lower than the 4 percent
growth projected by the government earlier in the year.
"The growth rate is the figure that Seoul wants to reach and not an actual
prediction of growth," said Yook Dong-han, head of the ministry's economic policy
bureau.
He hinted that GDP numbers released by the central bank may be closer to actual
growth reached, but stressed it is the role of the government to set high goals.
GDP growth of 2 percent would be the lowest since the 6.9 percent contraction
tallied in 1998 as the country struggled to cope with the Asian financial crisis.
A growth in the 3 percent range will be on par with 3.1 percent growth reached in
2003.
The official added that 2009 promises to be a very tough year for the country and
the rest of the world, and said that earlier predictions about various incentives
and large-scale state projects contributing 1 percentage point to growth may have
to be reassessed at present, with the unexpected sharp loss of economic buoyancy
in the past few months.
"Even if the exact same policies (as proposed) are carried out, the effect can be
different if overall economic health has deteriorated," Yook said.
The director general said that while Seoul had officially maintained that this
year's growth will surpass the 4 percent mark, a sharp drop in production,
exports and consumption from September onwards, has caused predictions to be
lowered to 3.6 percent. In 2007, the South Korean economy grew by a solid 5
percent.
The official also said the country's current account surplus could reach US$10
billion won in 2009 from an estimated $6 billion deficit this year, with consumer
prices gaining around 3 percent from 4.7 percent this year.
On employment, the ministry's report said that Seoul is aiming to create 100,000
new jobs in the new year, but warned that exact targets meaningless since the
employment market will likely freeze up.
"The government respects the BOKs prediction of 40,000 new jobs being created in
2009," Yook said and did not refute the possibility that there may be negative
growth in the job market in the first half as the weak economy triggers layoffs.
He said unemployment may edged up to 3 to 4 percent in the new year from around
3.2 percent for 2008.
The numbers forecasted fell well shy of the 200,000-300,000 new positions that
the Lee Myung-bak administration said should be created in the coming years to
ensure sustainable growth and to absorb an annual influx of job seekers.
On crude oil prices that played havoc with the country's trade balance this year,
the ministry said the average for next year should hover around $60 per barrel,
down sharply from a record high of $140 reached in July.
A drop in crude prices can help improve the balance of trade, which could exceed
$10 billion by year's end.
To help stabilize the exchange rate, which has fluctuated violently this year,
the government will set aside 20.6 trillion won (US$15.2 billion) in foreign
exchange stabilization bonds.
The country's top economic policymaking body, meanwhile, said experience has
shown that an economic slump caused by a liquidity crunch requires 3-4 years to
correct and since the U.S. sub-prime mortgage debacle started materializing last
year, it may not be until 2010 or 2011 before overall economic conditions return
to normal.
It added that if concerted efforts to revive the global economy begin to bite,
signs of recovery could materialize starting late next year.
Other sources in the ministry said that while public restructuring plans to merge
and sell off state-run companies are to be completed in the first half of 2009,
current conditions may affect the timetable.
A insider said that it may be physically impossible to privatize state-run Korean
Development Bank before June of next year.
yonngong@yna.co.kr
(END)
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In its economic management plan, the Ministry of Strategy and Finance said full
fledged stimulus programs including deregulation, tax cuts and increased state
spending should help to sustain growth in the new year. It said up to 65 percent
of next year's fiscal spending will be spent in the first six months.
The target is higher than the 2 percent gross domestic product (GDP) growth
forecasted by the Bank of Korea (BOK) last week, but lower than the 4 percent
growth projected by the government earlier in the year.
"The growth rate is the figure that Seoul wants to reach and not an actual
prediction of growth," said Yook Dong-han, head of the ministry's economic policy
bureau.
He hinted that GDP numbers released by the central bank may be closer to actual
growth reached, but stressed it is the role of the government to set high goals.
GDP growth of 2 percent would be the lowest since the 6.9 percent contraction
tallied in 1998 as the country struggled to cope with the Asian financial crisis.
A growth in the 3 percent range will be on par with 3.1 percent growth reached in
2003.
The official added that 2009 promises to be a very tough year for the country and
the rest of the world, and said that earlier predictions about various incentives
and large-scale state projects contributing 1 percentage point to growth may have
to be reassessed at present, with the unexpected sharp loss of economic buoyancy
in the past few months.
"Even if the exact same policies (as proposed) are carried out, the effect can be
different if overall economic health has deteriorated," Yook said.
The director general said that while Seoul had officially maintained that this
year's growth will surpass the 4 percent mark, a sharp drop in production,
exports and consumption from September onwards, has caused predictions to be
lowered to 3.6 percent. In 2007, the South Korean economy grew by a solid 5
percent.
The official also said the country's current account surplus could reach US$10
billion won in 2009 from an estimated $6 billion deficit this year, with consumer
prices gaining around 3 percent from 4.7 percent this year.
On employment, the ministry's report said that Seoul is aiming to create 100,000
new jobs in the new year, but warned that exact targets meaningless since the
employment market will likely freeze up.
"The government respects the BOKs prediction of 40,000 new jobs being created in
2009," Yook said and did not refute the possibility that there may be negative
growth in the job market in the first half as the weak economy triggers layoffs.
He said unemployment may edged up to 3 to 4 percent in the new year from around
3.2 percent for 2008.
The numbers forecasted fell well shy of the 200,000-300,000 new positions that
the Lee Myung-bak administration said should be created in the coming years to
ensure sustainable growth and to absorb an annual influx of job seekers.
On crude oil prices that played havoc with the country's trade balance this year,
the ministry said the average for next year should hover around $60 per barrel,
down sharply from a record high of $140 reached in July.
A drop in crude prices can help improve the balance of trade, which could exceed
$10 billion by year's end.
To help stabilize the exchange rate, which has fluctuated violently this year,
the government will set aside 20.6 trillion won (US$15.2 billion) in foreign
exchange stabilization bonds.
The country's top economic policymaking body, meanwhile, said experience has
shown that an economic slump caused by a liquidity crunch requires 3-4 years to
correct and since the U.S. sub-prime mortgage debacle started materializing last
year, it may not be until 2010 or 2011 before overall economic conditions return
to normal.
It added that if concerted efforts to revive the global economy begin to bite,
signs of recovery could materialize starting late next year.
Other sources in the ministry said that while public restructuring plans to merge
and sell off state-run companies are to be completed in the first half of 2009,
current conditions may affect the timetable.
A insider said that it may be physically impossible to privatize state-run Korean
Development Bank before June of next year.
yonngong@yna.co.kr
(END)
Download this as a file
