S. Korea to maintain fiscal expansion as uncertainties remain: gov't

(ATTN: ADDS detailed assessment from 5th para, TRIMS)
SEOUL, Aug. 6 (Yonhap) -- South Korea's economy is on a solid path to recovery
but uncertainty lingers, the government said Thursday, pledging to maintain its
expansionary policy until more marked signs emerge that the rebound is
sustainable.
"The recovery is intensifying steadily, but it still remains to be seen whether
the trend will continue even into the second half at a time when the government
has less additional fiscal capacity (to accelerate the recovery)," the Finance
Ministry said in its monthly economy-assessment report.
"We will stick to our expansionary macroeconomic policy stance until an economic
recovery driven by the private sector materializes," it added.
The government assessment comes amid growing optimism that the economy might be
bottoming out and indeed may have already hit its lowest point amid improving
indicators.
Industrial output continued to expand 5.7 percent in June from a month earlier,
marking a sixth straight month of on-month growth. Service-sector production also
grew 1.7 percent compared with minus 0.9 percent in the previous month, the
report showed.
Consumption and corporate investment showed signs of a pickup.
Consumer goods sales rose 1.8 percent in June from a month earlier as government
tax cuts resulted in a hike in sales of automobiles. Facility investment also
rose 9.5 percent over the same period, according to the report.
Still, a global slowdown hit the nation's exports hard, with its July outbound
shipments dropping 20.1 percent from a year earlier after declining 12.4 percent
in the previous month.
The labor market also remains tight. The jobless rate stood at 3.9 percent in
June, up from the previous month's 3.8 percent, marking the highest level in
three months.
Thanks to the government-led job creating efforts, however, the economy added
4,000 jobs after losing 219,000 positions from payrolls.
"The government will continue our efforts to create jobs, stabilize the
livelihoods of ordinary people and bolster consumption and corporate investment
while coping actively with a possible instability in the real estate market," the
report said.
kokobj@yna.co.kr
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