(Yonhap Interview) S. Korea's economy to shrink 2 pct in 2009: Moody's

SEOUL, Jan. 28 (Yonhap) -- South Korea's economy will shrink 2 percent this year,
Moody's Investors Service forecast Wednesday, joining a growing number of
research groups in expecting the first recession in more than a decade for the
Asian economic powerhouse.

The global ratings agency forecast 2 percent growth for South Korea in November.
The latest prediction is far lower than the government's growth target of 3
percent for this year and compares with the previous year's 2.5 percent
expansion.
"The early prediction was made on data and trends evident as of September 2009.
The forecast was a bit on the pessimistic side. Nonetheless, since then the
global credit crunch became severe and the global recession deepened," Tom Byrne,
a senior vice president at the Moody's Asia-Middle East regional credit office,
said in an e-mail interview with Yonhap News Agency.
"We now think real gross domestic product (GDP) growth will likely contract by
about 2 percent in 2009. This assumes that global economic conditions regain some
stability in the second half of 2009. If not, the risks will be on the downside,"
he noted.
Moody's downgrade comes after a growing number of think tanks and research groups
rushed to trim their 2009 projections for South Korea's economy, citing slumping
exports and domestic demand, hit by the global slowdown.
The Switzerland-based UBS predicted the economy to shrink 3 percent for this
year, the worst performance forecast by a foreign investment bank. Fitch Ratings,
another global ratings agency, expected a 2.4 percent contraction, while Standard
& Poor's recently lowered its outlook to zero percent.
kokobj@yna.co.kr
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