ID :
56932
Wed, 04/22/2009 - 21:16
Auther :
Shortlink :
https://www.oananews.org//node/56932
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S. Korean economy to contract 4 pct in 2009, grow 1.5 pct in 2010: IMF
By Hwang Doo-hyong
WASHINGTON, April 22 (Yonhap) -- South Korea's economy will decline 4 percent
this year amid a prolonged global recession before rebounding to post a modest
1.5 percent growth next year, the International Monetary Fund forecast Wednesday.
The figure for this year remained unchanged from an earlier projection by the IMF
in January, but next year's forecast is a sharp decline from the 4.2 percent
growth predicted three months earlier by the global lending agency.
South Korean Prime Minister Han Seung-soo said in Berlin Tuesday (local time)
that his country's economy is showing signs of picking up in the second quarter
of this year and that such positive indicators could allow for up to 4 percent
growth next year.
The IMF's revised projection for the world's 13th biggest economy comes as the
agency significantly lowered its global output projection to a contraction of 1.3
percent this year from its earlier prediction of 0.5 percent growth, citing the
unabated financial crisis and ensuing loss of confidence.
The world economy is projected to grow by 1.9 percent next year, although
"achieving this turnaround will depend on stepping up efforts to heal the
financial sector while continuing to support demand with monetary and fiscal
easing," the IMF said in its quarterly economic outlook.
South Korea and three other export-oriented Asian economies -- Hong Kong,
Singapore and Taiwan -- are among the hardest hit by the global downturn, the
report said, forecasting a contraction of 5.6 percent for the group this year, a
steeper decline than a 3.6 percent contraction projected three months earlier.
Their economies will likely record a modest growth rate of 0.8 percent next year,
the IMF said.
Disappointing corporate and household balance sheets "will exacerbate the impact
of external shocks in Korea," the report said, also citing "extreme openness and
high dependence on external demand" and "the collapse in demand for consumer
durable goods and capital goods in advanced economies and, to a lesser degree,
the deterioration in global financial conditions."
Advanced economies will likely suffer the most from the ongoing recession, with
Japan likely to experience the steepest decline of 6.2 percent in output this
year before rebounding to a 0.5 percent growth, the report said.
"In Japan, the downturn is exceptionally severe, and is being driven largely by
trade, which has been hit hard because of the economy's heavy reliance on
manufacturing exports, and by spillover to domestic investment," the report said.
The U.S. economy is projected to decline 2.8 percent this year due to "credit
constraints, given the direct damage to their financial institutions, major
housing corrections and reliance on household borrowing to support consumption."
It is expected to record a zero percent growth next year.
The European Union is projected to suffer a contraction of 4.2 percent this year,
followed by a 0.4 percent decline next year.
China and India, however, will maintain solid growth rates of 6.5 percent and 4.5
percent, respectively, this year due to "the momentum of domestic demand
reinforced, particularly in China, by policy easing."
Their performance is projected to strengthen further next year, with China
expected to post a 7.5 percent expansion and India a 5.6 percent expansion.
The IMF called for both advanced and emerging economies to adopt a mix of
monetary and fiscal policies to help quicken the recovery of the global economy.
"In advanced economies, scope for easing monetary policy further should be used
aggressively to counter deflation risks," the report said. "Although policy rates
are already near the zero floor in many countries, whatever policy room remains
should be used quickly."
Emerging economies were also urged to "ease monetary conditions to respond to the
deteriorating outlook," but given that monetary policy in most countries has been
exhausted, the IMF put more focus on fiscal policy.
"In view of the extent of the downturn and the limits to the effectiveness of
monetary policy, fiscal policy must play a crucial part in providing short-term
stimulus to the global economy," the report said. "Past experience suggests that
fiscal policy is particularly effective in shortening the duration of recessions
caused by financial crises."
hdh@yna.co.kr
(END)
WASHINGTON, April 22 (Yonhap) -- South Korea's economy will decline 4 percent
this year amid a prolonged global recession before rebounding to post a modest
1.5 percent growth next year, the International Monetary Fund forecast Wednesday.
The figure for this year remained unchanged from an earlier projection by the IMF
in January, but next year's forecast is a sharp decline from the 4.2 percent
growth predicted three months earlier by the global lending agency.
South Korean Prime Minister Han Seung-soo said in Berlin Tuesday (local time)
that his country's economy is showing signs of picking up in the second quarter
of this year and that such positive indicators could allow for up to 4 percent
growth next year.
The IMF's revised projection for the world's 13th biggest economy comes as the
agency significantly lowered its global output projection to a contraction of 1.3
percent this year from its earlier prediction of 0.5 percent growth, citing the
unabated financial crisis and ensuing loss of confidence.
The world economy is projected to grow by 1.9 percent next year, although
"achieving this turnaround will depend on stepping up efforts to heal the
financial sector while continuing to support demand with monetary and fiscal
easing," the IMF said in its quarterly economic outlook.
South Korea and three other export-oriented Asian economies -- Hong Kong,
Singapore and Taiwan -- are among the hardest hit by the global downturn, the
report said, forecasting a contraction of 5.6 percent for the group this year, a
steeper decline than a 3.6 percent contraction projected three months earlier.
Their economies will likely record a modest growth rate of 0.8 percent next year,
the IMF said.
Disappointing corporate and household balance sheets "will exacerbate the impact
of external shocks in Korea," the report said, also citing "extreme openness and
high dependence on external demand" and "the collapse in demand for consumer
durable goods and capital goods in advanced economies and, to a lesser degree,
the deterioration in global financial conditions."
Advanced economies will likely suffer the most from the ongoing recession, with
Japan likely to experience the steepest decline of 6.2 percent in output this
year before rebounding to a 0.5 percent growth, the report said.
"In Japan, the downturn is exceptionally severe, and is being driven largely by
trade, which has been hit hard because of the economy's heavy reliance on
manufacturing exports, and by spillover to domestic investment," the report said.
The U.S. economy is projected to decline 2.8 percent this year due to "credit
constraints, given the direct damage to their financial institutions, major
housing corrections and reliance on household borrowing to support consumption."
It is expected to record a zero percent growth next year.
The European Union is projected to suffer a contraction of 4.2 percent this year,
followed by a 0.4 percent decline next year.
China and India, however, will maintain solid growth rates of 6.5 percent and 4.5
percent, respectively, this year due to "the momentum of domestic demand
reinforced, particularly in China, by policy easing."
Their performance is projected to strengthen further next year, with China
expected to post a 7.5 percent expansion and India a 5.6 percent expansion.
The IMF called for both advanced and emerging economies to adopt a mix of
monetary and fiscal policies to help quicken the recovery of the global economy.
"In advanced economies, scope for easing monetary policy further should be used
aggressively to counter deflation risks," the report said. "Although policy rates
are already near the zero floor in many countries, whatever policy room remains
should be used quickly."
Emerging economies were also urged to "ease monetary conditions to respond to the
deteriorating outlook," but given that monetary policy in most countries has been
exhausted, the IMF put more focus on fiscal policy.
"In view of the extent of the downturn and the limits to the effectiveness of
monetary policy, fiscal policy must play a crucial part in providing short-term
stimulus to the global economy," the report said. "Past experience suggests that
fiscal policy is particularly effective in shortening the duration of recessions
caused by financial crises."
hdh@yna.co.kr
(END)
