IMF to cut Korea's 2010 growth outlook: media report

SEOUL, April 20 (Yonhap) -- The International Monetary Fund (IMF) is expected to
sharply lower its 2010 growth outlook for South Korea to 1.5 percent, reflecting
its latest views on a protracted global downturn, a local newspaper said Monday.
The growth outlook for next year will be trimmed from a 4.2 percent advance
predicted in February by the organization, the Munhwa Ilbo reported, citing
unidentified sources.
In February, the IMF said that Asia's fourth-largest economy will contract 4
percent this year but will make one of the most dramatic turnarounds in the world
the following year.
The growth outlook, which is less than the half the central bank's projection,
comes as the IMF will likely cut its global economy outlook from 3 percent to 1
percent for next year, the report noted. Such small growth worldwide would wreak
havoc on South Korea's export-economy, it explained.
The government refused to confirm the report, saying that official IMF figures
will be announced on Wednesday. "We are still in consultations with the
organization to finalize the outlook on our economy," a finance ministry official
said on condition of anonymity.
The report comes as the economy has shown some signs of recovery in recent
months, with industrial output rebounding from its worst contraction ever and
financial markets regaining their composure as foreign investors purchase local
shares and bonds.
Those indicators are raising hopes that the economy might see a
faster-than-expected recovery. After falling 5.1 percent in the last quarter of
2008, gross domestic product rose 0.2 percent in the first quarter from three
months earlier, which also added to optimism.
Earlier in the day, the Ministry of Strategy and Finance said that the nation's
economy will likely rebound at the fastest pace among the world's major
countries, citing a report by the Organization for Economic Cooperation and
Development.
In an interview with CNN, however, Finance Minister Yoon Jeung-hyun cautioned
against such optimism, saying it is too early to predict how the economy will
fare down the road as negative factors coexist alongside positive ones.
"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.
Experts say that the IMF report might be signaling that the nation's economic
growth would not be V-shaped but L-shaped, taking more time than anticipated
before making a turnaround.
South Korea's economy is feared to lapse into the first recession this year in
more than a decade, as the government predicts demand for Korean goods at home
and abroad will decline amid a protracted global downturn.
kokobj@yna.co.kr
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