S. Korean economy to shrink 2.8 pct in 2009: think tank

SEOUL, April 28 (Yonhap) -- The South Korean economy is expected to shrink 2.8
percent in 2009 from a year earlier amid falling exports and stagnant domestic
consumption, a local think tank said Tuesday.
The economy is likely to contract 4.3 percent on-year in the first half and
shrink 1.2 percent for the remainder of this year, the Korea Institute of Finance
(KIF) said in its latest growth outlook.
The full-year forecast represents a sharp turnaround from KIF's earlier
predication of a 1.7 percent expansion.
"Accelerating joblessness is crimping local consumption while the global economic
downswing is crippling the nation's exports," KIF said.
The economy could suffer a sharper contraction if global financial trouble
further weighs down the real economy and the world economy continues to worsen,
it warned.
According to the report, South Korea's unemployment rate will likely jump to 3.6
percent this year, compared with 3.2 percent in 2008, as companies scale down
their workforces amid sluggish sales and corporate restructuring.
A wider reduction in imports than in exports, however, may help Asia's
fourth-largest economy to post a trade surplus of US$16 billion, compared with a
deficit of $13.3 billion a year earlier.
KIF's forecast comes as the South Korean economy barely averted a recession in
the first quarter by creeping up 0.1 percent from three months earlier.
The unexpected growth was attributed to state pump-priming measures and a
slowdown in export declines. Outbound shipments fell 3.4 percent on-quarter in
the January-March period after sinking 12.6 percent three month earlier.
pbr@yna.co.kr
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