ID :
54799
Fri, 04/10/2009 - 17:01
Auther :
Shortlink :
https://www.oananews.org//node/54799
The shortlink copeid
S. Korean economy to shrink 2.4 pct this year: BOK
(ATTN: RECASTS paras 2-8)
By Kim Soo-yeon
SEOUL, April 10 (Yonhap) -- The South Korean economy is expected to contract 2.4
percent this year, the worst performance in 11 years, as a global recession will
likely hurt exports amid stubbornly weak domestic demand, the central bank said
Friday.
The Bank of Korea (BOK) predicted that Asia's fourth-largest economy may hit
bottom in the second or third quarter, but it is expected to recover very slowly
due to uncertainty about the global recession.
In a revised economic outlook, the BOK cut its forecast for the local economy
from its estimate of a 2 percent expansion made in December. The Korean economy
grew 2.2 percent last year.
"The Korean economy may bottom out in the second or third quarter. But given the
current economic conditions, it's difficult to expect a sharp recovery," Kim
Jae-chun, director-general at the BOK's research department, told a press
conference.
"The pace of the economic recovery is expected to be very slow and the economy
may get better only after the second half of next year."
But the BOK said that the country's gross domestic product (GDP), the broadest
measure of economic performance, may have staved off a recession, defined as two
straight quarters of contraction, in the first quarter.
After shrinking 5.1 percent in the fourth quarter, the Korean economy is
estimated to have grown 0.2 percent on-quarter in the first quarter, helped by
the government's economic stimulus and rate cuts.
In the second quarter, the economy will likely expand 0.5 percent from three
months earlier. The bank forecast a 3.5 percent expansion for next year.
The BOK's lower growth estimate comes as the government says Asia's
fourth-largest economy is likely to contract 2 percent this year even after
taking into account a record 28.9 trillion won (US$21.9 billion) extra budget
aimed at creating more jobs and jump-starting the sputtering economy. Of the
total, it set aside 17.7 trillion won for fiscal spending.
The government and the central bank are making efforts to cushion the impact of
the global recession on the Korean economy by unveiling a string of stimulus
packages and cutting the key rate.
"The Korean economy is likely to approach bottom in the current or the next
quarter," said Lee Sung-kwon, an economist at Goodmorning Shinhan Securities Co.
"Although the BOK left a door open for additional rate cuts, it seems to have
effectively wrapped up its easing cycle for the year."
Exports, which account for about 60 percent of GDP, are forecast to tumble 9.9
percent in 2009, a turnaround from a previous prediction of a 1.3 percent
expansion.
Private spending, one of the economy's main growth engines, will likely decline
2.6 percent this year, compared with estimates of a 0.8 percent gain as the
economic slump dents household income and job markets.
Meanwhile, the BOK expected the country's inflation to slow to 2.7 percent,
compared with an earlier 3 percent estimate, as falling oil prices and slumping
demand reduce overall import bills. The BOK aims to keep annual inflation between
2.5 percent and 3.5 percent until 2009.
"Starting in May, inflation will likely fall to the 2 percent range," Kim said.
The outlook downgrade comes a day after the BOK froze its key interest rate at a
record low of 2 percent for the second straight month in April, saying that a
sharp fall in economic activity has moderated. It had made six consecutive rate
cuts totaling 3.25 percentage points since October.
But despite some signs of improvements, BOK Gov. Lee Seong-tae warned that it
would be difficult to feel the bottoming out of the Korean economy in the first
half of this year, adding there is room for possible rate cuts.
The bank also said Korea is forecast to post a current account surplus of around
$18 billion this year, down from a previous estimate of $22 billion. The
government predicted that the surplus will likely reach around $16 billion.
sooyeon@yna.co.kr
(END)
By Kim Soo-yeon
SEOUL, April 10 (Yonhap) -- The South Korean economy is expected to contract 2.4
percent this year, the worst performance in 11 years, as a global recession will
likely hurt exports amid stubbornly weak domestic demand, the central bank said
Friday.
The Bank of Korea (BOK) predicted that Asia's fourth-largest economy may hit
bottom in the second or third quarter, but it is expected to recover very slowly
due to uncertainty about the global recession.
In a revised economic outlook, the BOK cut its forecast for the local economy
from its estimate of a 2 percent expansion made in December. The Korean economy
grew 2.2 percent last year.
"The Korean economy may bottom out in the second or third quarter. But given the
current economic conditions, it's difficult to expect a sharp recovery," Kim
Jae-chun, director-general at the BOK's research department, told a press
conference.
"The pace of the economic recovery is expected to be very slow and the economy
may get better only after the second half of next year."
But the BOK said that the country's gross domestic product (GDP), the broadest
measure of economic performance, may have staved off a recession, defined as two
straight quarters of contraction, in the first quarter.
After shrinking 5.1 percent in the fourth quarter, the Korean economy is
estimated to have grown 0.2 percent on-quarter in the first quarter, helped by
the government's economic stimulus and rate cuts.
In the second quarter, the economy will likely expand 0.5 percent from three
months earlier. The bank forecast a 3.5 percent expansion for next year.
The BOK's lower growth estimate comes as the government says Asia's
fourth-largest economy is likely to contract 2 percent this year even after
taking into account a record 28.9 trillion won (US$21.9 billion) extra budget
aimed at creating more jobs and jump-starting the sputtering economy. Of the
total, it set aside 17.7 trillion won for fiscal spending.
The government and the central bank are making efforts to cushion the impact of
the global recession on the Korean economy by unveiling a string of stimulus
packages and cutting the key rate.
"The Korean economy is likely to approach bottom in the current or the next
quarter," said Lee Sung-kwon, an economist at Goodmorning Shinhan Securities Co.
"Although the BOK left a door open for additional rate cuts, it seems to have
effectively wrapped up its easing cycle for the year."
Exports, which account for about 60 percent of GDP, are forecast to tumble 9.9
percent in 2009, a turnaround from a previous prediction of a 1.3 percent
expansion.
Private spending, one of the economy's main growth engines, will likely decline
2.6 percent this year, compared with estimates of a 0.8 percent gain as the
economic slump dents household income and job markets.
Meanwhile, the BOK expected the country's inflation to slow to 2.7 percent,
compared with an earlier 3 percent estimate, as falling oil prices and slumping
demand reduce overall import bills. The BOK aims to keep annual inflation between
2.5 percent and 3.5 percent until 2009.
"Starting in May, inflation will likely fall to the 2 percent range," Kim said.
The outlook downgrade comes a day after the BOK froze its key interest rate at a
record low of 2 percent for the second straight month in April, saying that a
sharp fall in economic activity has moderated. It had made six consecutive rate
cuts totaling 3.25 percentage points since October.
But despite some signs of improvements, BOK Gov. Lee Seong-tae warned that it
would be difficult to feel the bottoming out of the Korean economy in the first
half of this year, adding there is room for possible rate cuts.
The bank also said Korea is forecast to post a current account surplus of around
$18 billion this year, down from a previous estimate of $22 billion. The
government predicted that the surplus will likely reach around $16 billion.
sooyeon@yna.co.kr
(END)
