S. Korea's economy remains in a slump: gov't report

(ATTN: ADDS assessment by state-run think tank in 2nd, 5-6 para; ADDS OECD report in
8th para)
By Koh Byung-joon
SEOUL, June 4 (Yonhap) -- South Korea's economy may be recovering as a global
downturn abates but it remains in a slump as domestic demand, exports and other
indicators are not showing signs of marked improvement, a government report
showed Thursday.

The state-run think tank, Korea Development Institute (KDI), echoed the
government review, saying that though the economy is on a path to recovery it is
difficult to say whether it has come out of a recession phase.
"While financial markets are stabilizing and industrial output continues its
on-month expansion, the overall economy still remains in a slump due to weak
domestic demand, exports and employment markets," the Finance Ministry said in
its monthly economy-assessment report.
"A global economic downturn is abating and the local economy is also on the road
to recovery but the pace of the rebound is weak and uncertainty in worldwide
financial markets and concerns over rising oil prices make it tough to paint an
optimistic outlook for the future," it added.
KDI shared echoed the government's view in a similar monthly report.
"The Korean economy is still considered to be in a recession phase, although some
economic indicators are showing improvements," the think tank said, citing
sluggish consumption and facility investment.
The assessment by the government and the state-run think tank come amid growing
optimism that the economy might be bottoming out and indeed may have already hit
its lowest point amid improving indicators.
Adding to the optimism, the Organization for Economic Cooperation and Development
said in a report that South Korea will show the fastest economic recovery among
member countries.
According to government data, South Korea's industrial output shrank 8.2 percent
in April from a year earlier, decelerating from a 10.5 percent on-year decline in
March. From a month earlier, output rose 2.6 percent, the fourth consecutive
month of expansion.
Sales of consumer goods in the same month fell 4 percent from a year earlier
after declining 5.2 percent in March.
Corporate investments, however, remained weak amid cloudy economic outlooks.
Facility investments plunged 25.3 percent in April from a 23.3 percent decline a
month earlier.
Exports, the nation's main growth engine, also slumped. Overseas shipments
declined 28.3 percent in May after falling 19.6 percent the previous month. The
ministry forecast that slumping exports could lead to a contraction in industrial
output in May.
"We need to keep our expansionary macroeconomic policy stance, while making
efforts to create jobs and stabilize the lives of ordinary people by carrying out
additional fiscal spending," the ministry said.
"In addition, we are required to enhance the environment for corporate investment
and business conditions. Restructuring for the corporate sector should also be
pushed in a consistent way as part of efforts to raise competitiveness and
strengthen economic fundamentals," it added.
kokobj@yna.co.kr
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