S. Korean economy to recover fastest among OECD nations: report

(ATTN: ADDS more comments from finance minister in last 2 paras)
SEOUL, April 20 (Yonhap) -- South Korea's economy is expected to recover at the
fastest pace among the world's major countries as it shows signs of stabilization
after output grew and foreign liquidity expanded, a report showed Monday.

According to the report by the Organization for Economic Cooperation and
Development (OECD), the composite leading indicator (CLI) for South Korea
increased to 94.5 in February, up 1.6 points from 92.9 a month earlier.
The CLI is a composite economic indicator that gauges how the economy will fare
six months ahead by measuring industrial output, housing and financial market
conditions, and the gross domestic product of each nation. A reading below 100
means the economy will continue to shrink.
South Korea posted the steepest improvement among the 30 OECD member nations in
the index, the report showed. Mexico saw its February CLI rise 0.5 points,
followed by Italy, Turkey, Finland and New Zealand.
The OECD average stood at 92, down 0.7 points from a month earlier, according to
the report, raising hopes that South Korea, Asia's fourth-largest economy, will
rebound at the fastest clip among major global economies.
Buffeted by a protracted global downturn, the South Korean economy is feared to
contract 2.4 percent this year, the first minus growth in more than a decade,
according to the latest prediction by the central bank.
However, as the government rushes to unveil a series of stimulus measures,
including a 28.9 trillion won extra budget, indicators are showing some signs of
stabilization. Industrial output expanded in February from a month earlier and
financial markets are regaining composure as foreign investors are purchasing
local shares and bonds.
On April 9, the government announced that it sold US$3 billion worth of
dollar-denominated state bonds, quelling concerns over a liquidity crunch in the
world's 13th biggest economy
Gross domestic product also rose 0.2 percent in the first quarter from three
months earlier after plunging 5.1 percent in the last quarter of 2008, the
central bank said.
"The OECD report shows that our economy will likely recover at the fastest pace
among its member countries, a forecast evidenced by some improving economic
indicators including industrial output and expanded liquidity," a finance
ministry official said.
Still, many experts caution against being overly optimistic about a quick
V-shaped economic recovery as the global downturn and a sluggish domestic labor
market continue to be a drag.
President Lee Myung-bak told a meeting last week that there is still a long way
to go before the economy recovers, saying that it now "stands somewhere in the
middle of a long tunnel."
In an interview with CNN, Finance Minister Yoon Jeung-hyun echoed the president's
cautious view, saying it is too early to predict how the economy will fare down
the road as negative factors coexist alongside positive ones.
"It's too early to be optimistic about the economic situation due to a mixture of
positive and negative factors. Therefore, we think that we still need to closely
monitor the world economy," Yoon said.
"An external crisis can directly impact the economy because of its heavy
dependence on exports. So, our top concern is how we can grow the domestic market
to reduce our vulnerability," he said.
kokobj@yna.co.kr
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