Recovery of S. Korean economy has long way to go: economists

SEOUL, May 20 (Yonhap) -- South Korea's financial markets are showing some signs of stabilization, but the nation's real economy still has a long way to go before seeing a full recovery, a survey of 20 economists showed Wednesday.

South Korea's export-dependent economy has been hit hard by slumping exports and
sluggish consumption at home amid the global economic slump.
The economy grew 0.1 percent in the first-quarter of this year, from a 5.1
percent contraction in the previous quarter, prompting some analysts and
government officials to predict that the economy may bottom out this year.
Record-low interest rates and the government's stimulus packages helped the
economy avoid a technical recession in the January-March period, but the
economists said real economic indicators such as the jobless rate or corporate
investment give little ground for optimism.
According to the survey, conducted by the Federation of Korean Industries, the
nation's largest business lobby, 90 percent of the economists said the economy is
unlikely to enter a recovery stage during the first-half of this year.
"The economists say some encouraging signs in the first quarter were mainly due
to the won's weakness against the U.S. dollar for the same period," the
federation said in a statement.
Adding to the gloomy outlook, the won's rallied about 30 percent versus the
dollar since early March, when it touched an 11-year low.
A strong won makes South Korean goods expensive overseas and erodes the
foreign-exchange proceeds an exporter can earn.
The economists expected South Korea's economy, Asia's third-largest, to contract
2.4 percent this year, worse than the government's forecast of a two-percent
shrinkage.
Last week, the Bank of Korea kept its key interest rate unchanged at a record low
of two percent for the third consecutive month.