S. Korean economy at risk of contracting: survey

SEOUL, Aug. 13 (Yonhap) -- A majority of economists in South Korea agree the
economy is on a recovery course, but they warn that the risk of another downturn
still looms, a survey showed Thursday.

About two-thirds of the 52 respondents said Asia's fourth-largest economy is
recovering, but there is still a chance that the economy could contract,
according to the survey conducted by the Korea Chamber of Commerce and Industry.
The South Korean economy grew 2.3 percent on-quarter in the second quarter of the
year, the fastest pace in more than five years, as economic stimulus packages
helped boost consumer spending and exports rose.
The second-quarter expansion is underpinning optimism that the Korean economy
might have passed its worst downturn in more than a decade and is an indication
of its resilience.
According to the survey, about half of the respondents projected that the economy
will post a full-fledged recovery in 2010. They pointed to the global economic
downturn and the rising price of oil and other raw materials as factors that
could hinder a full-fledged economic recovery.
About 87 percent of the respondents also said the government should maintain its
"expansionary" economic policies in order to help prevent the economy from
shrinking again, the survey showed.
The government and the Bank of Korea have been scrambling to bolster the slumping
economy by implementing large scale fiscal spending and aggressively cutting the
key interest rate.
The central bank slashed the rate by a total of 3.25 percentage points to a
record low of 2 percent between October and February in an effort to boost the
sagging economy. It froze the rate at 2 percent for a sixth straight month in
August.
sam@yna.co.kr
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