S. Korea's Q1 growth forecast to be near zero

SEOUL, March 19 (Yonhap) -- South Korea's quarterly economic growth is expected
to be near zero for the first quarter with a full-blown recovery unlikely in the
near future, economists said Thursday.

The growth forecast represents an improvement from last quarter's dismal
performance. Asia's fourth-largest economy shrank 5.6 percent on-quarter in the
October-December period, the worst performance in 11 years, due to tumbling
exports and sluggish domestic demand.
"Although it is not easy to predict, we consider it possible that the economy may
log slightly positive growth in the current quarter," said Kwon Soon-woo, a
senior economist at Samsung Economic Research Institute.
Several sets of economic data show that although it is premature to say that the
Korean economy is bottoming out, its steep fall seems to ease at least, analysts
said.
The country's industrial output rose 1.3 percent in January from a month earlier,
making the first rebound in four months although it tumbled a record 25.6 percent
from a year earlier.
Exports, the mainstay of the economic growth, fell 17.1 percent on-year last
month after plunging a record 33.8 percent in January. The government predicted
that the country's trade surplus may top a record US$4 billion in March thanks to
a sharp drop in imports.
But experts said that even if the economy is to log slightly positive growth in
the current quarter, it is too early to say that Asia's fourth-largest economy
may begin to make a turnaround, given a deteriorating job market and still-weak
exports and domestic demand.
South Korea's jobless rate jumped to a four-year high of 3.9 percent in February
and the country saw 142,000 jobs eliminated, the largest reduction since
September 2003.
Sluggish job markets deal a blow to households' income, prompting more people to
cut their spending and placing a further burden on the slowing economy.
"Whether Korea's export-driven economy falls into a prolonged recession or not
will depend on how quickly the U.S.-sparked global financial turmoil eases," said
Kim Chang-bae, an economist at Korea Economic Research Institute.
sooyeon@yna.co.kr
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