S. Korean economy to rebound fastest among OECD nations: report

By Koh Byung-joon
SEOUL, June 4 (Yonhap) -- South Korea's economy has already bottomed out and is
expected to recover the fastest out of the world's major countries as output
expands and other indicators show signs of stabilization, a report showed
Thursday.

According to the report by the Organization for Economic Cooperation and
Development (OECD), the composite leading indicator (CLI) for South Korea
increased to 96.8 in March, up 2.2 points from 94.6 a month earlier.
The CLI is an indicator that gauges how the economy will fare six months ahead by
measuring industrial output, housing and financial market conditions, and the
gross domestic product of each nation. A reading below 100 means the economy will
continue to shrink.
South Korea's CLI remains below par but the 2.2-point increase was the steepest
improvement among 29 OECD member nations, the report showed. It is the second
consecutive month that the nation has posted the sharpest increase in the
indicator.
Only 10 countries posted an improvement, with Turkey seeing its March CLI rise
1.4 points, the second steepest, followed by Mexico and France with increases of
1.3 points and 1.1 points, respectively, the report showed.
The OECD average stood at 92.2, down 0.2 points from a month earlier, according
to the report, indicating South Korea, Asia's fourth-largest economy, will likely
fare far better than its rival countries down the road.
Hit by a protracted global downturn, the South Korean economy is feared to
contract 2.4 percent this year, the first minus growth in more than a decade,
according to the latest prediction by the central bank.
However, as the government rushes to unveil a series of stimulus measures
including additional fiscal spending, indicators are showing some signs of
stabilization.
Industrial output shrank 8.2 percent in April from a year earlier, decelerating
from a 10.5 percent on-year decline in March. The April figure marked the first
time that output has decreased by a single digit after contracting 10 percent or
higher over the previous five months.
Gross domestic product rose 0.1 percent in the first quarter from three months
earlier after plunging 5.1 percent in the last quarter of 2008, the central bank
said.
Financial markets, which underwent fluctuations since last summer in the wake of
the collapse of U.S. investment giant Lehman Brothers, are showings signs of
stabilization as well.
Stock and currency markets are gaining ground as jitters ease over yet another
financial crisis.
Exports, however, remain a drag on the economy which depends heavily on overseas
sales for its growth due to a protracted global recession.
According to government data, exports plunged 28.3 percent in May from a year
earlier following a 19.6 percent fall in April. But the nation posted a trade
surplus mainly thanks to a sharper drop in imports than exports.
"The OECD report seems to base its forecast for the fastest recovery of South
Korea among its member countries on improvements in real indicators,
stabilization in financial markets and trade surplus," a finance ministry
official said.
"It is encouraging that the CLI is nearing 100, raising possibility that the
economy will start its full-swing recovery from the second half of this year," he
added.
kokobj@yna.co.kr
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