S. Korean economy to shrink over 2 pct in 2009: think tank

SEOUL, April 21 (Yonhap) -- The South Korean economy is expected to shrink more
than 2 percent in 2009 from a year earlier, a local think tank said Tuesday, amid
plunging exports and flaccid domestic demand.
The Korea Institute of Finance (KIF) said it is poised to downgrade its growth
forecast for the economy to a contraction in the upper 2-percent range from an
earlier 1.7 percent expansion. The think tank said it will unveil its revised
outlook next week.
For 2010, the institute forecast a growth rate lower than the 3.5 percent
estimate made by the Bank of Korea. The central bank predicted a 2.4 percent
contraction for this year.
"After hitting bottom in the second half of 2010, the South Korean economy is
likely to make a significant recovery in 2011," KIF president Kim Tae-joon told
reporters. "Companies are expected to make bold investments in new plants and
equipment next year."
He said a recurrence of the global economic crisis is unlikely for now and that
South Korea's credit crunch and financial market jitters have also been subdued
to some extent.
The turmoil in the world economy, sparked by the U.S. mortgage crisis, has made a
big dent in the export-driven South Korean economy and caused its currency to
tumble against the greenback.
The Korean economy, Asia's fourth-largest, is feared to lapse into the first
recession in more than a decade this year as exports tumble and local consumers
remain reluctant to open their wallets.
pbr@yna.co.kr
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