Lee guards against economic optimism in national address

SEOUL, Aug. 15 (Yonhap) -- President Lee Myung-bak said Saturday that the South
Korean economy is recovering faster than other major countries thanks to
government-led stimulus efforts but it is premature to grow complacent as
downside risks still linger at home and abroad.

"Over the past year, we have overcome a series of crisis rumors that rocked our
economy and now it is recovering at a faster pace than other OECD countries," Lee
said in a speech marking the 64th anniversary of Korea's liberation from Japan's
1910-1945 colonial rule.
"We cannot afford to loosen up yet. Instead, we need to intensify efforts to
revive employment and investment," he added.
His comments echoed growing optimism among policymakers and market observers that
the economy, Asia's fourth-largest, is rebounding from turbulences that started
last year in the wake of the collapse of U.S. investment giant Lehman Brothers.
Stock and currency markets are stabilizing with the return of foreign capital,
while jitters over another liquidity crisis similar to the 1997-98 financial
meltdown are fast easing.
Other major indicators are also pointing in a positive direction, with industrial
output expanding for a sixth consecutive month in June and exports seeing a
decreased contraction from last year when global markets remained frozen.
According to the nation's central bank, the Korean economy expanded a
better-than-expected 2.3 percent in the second quarter from three months earlier
after inching up 0.1 percent in the first quarter. During the last quarter of
2008, the economy plunged 5.1 percent.
Experts say that such a fast recovery was buttressed by the government's
increased fiscal spending and tax reductions. During the first half of this year,
the government frontloaded over 60 percent of its budget spending.
Given that the first-half economic recovery is mostly driven by government-led
efforts, President Lee seems to be calling for companies to increase their
investments to pick up where the government will leave off as job markets and
corporate spending remain sluggish.
The CEO-turned-president has pushed to ease regulations and provide tax
reductions in a way to create a "business friendly" environment so that companies
expand investment, generate jobs and eventually stimulate the overall economy.
The president, meanwhile, has put his top priority on stabilizing the livelihood
of those most vulnerable to a protracted economic downturn, saying that his
government will focus its economic policy in the second half on offering more
homes, education support and other benefits to low and middle-income citizens.
"We are now crafting epochal housing measures intended to provide residences to
people without homes," the president said. "A system will also be introduced to
help street shop owners, temporary workers and others who are severely suffering
because they cannot obtain even small loans."
kokobj@yna.co.kr
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