Downside risks remain amid recovery signs: finance minister

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By Koh Byung-joon
SEOUL, Aug. 12 (Yonhap) -- The global economy is showing signs of a pickup, led
by advanced nations but downside risks linger, weighing on South Korea's
export-driven economy, Seoul's top economic policymaker said Wednesday.

"Recently stock markets in advanced nations such as the U.S. and Japan are
gaining ground and the pace of the economic downturn seems to be easing," Finance
Minister Yoon Jeung-hyun told a weekly crisis management meeting.
"But it is still true there are uncertainties over the recovery of the U.S.
economy down the road. We are required to cope with such global economic
conditions through close market monitoring." he added.
His cautious economic assessment comes amid growing optimism that the local
economy, Asia's fourth-largest, might be passing the worst phase of its economic
downturn, sparked by financial turbulence that started last year.
Such optimism is being buttressed by the latest indicators, many of which are
pointing to a rebound from a steep downturn last year. Industrial output expanded
for the sixth straight month in June, while consumption and corporate investment
are showing signs of a marked pickup.
The economy of advanced nations also seems to be recovering. Gross domestic
demand of the U.S. shrank a smaller-than-expected 1 percent in the second quarter
after plunging 6.4 percent in the January-March quarter. Employment data also
improved and transactions of properties, an epicenter of the global financial
turmoil, are also perking up, the minister noted.
However, Yoon noted that the latest positive signs especially stemming from the
U.S., one of South Korea's largest export markets, are mostly driven by increased
government spending with its private sector remaining far short of recovering on
its own. Joblessness is still high there, he added.
The minister still struck a upbeat note on the domestic front, citing rebounding
plant operation ratios and facility investment by local companies. "In order to
keep such a trend of recovery, the government, corporate leaders, labor unions
and households should all work together," he noted.
kokobj@yna.co.kr
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