S. Korean economy to shrink 1.7 pct this year: state bank

SEOUL, Sept. 1 (Yonhap) -- The South Korean economy is forecast to shrink 1.7 percent annually this year, a state-run policy bank said Tuesday, revising up an earlier estimate of a 3 percent contraction.

The Korea Development Bank (KDB) based its upgrade on budding signs of a global
economic recovery, a rebound in consumer confidence and continued surpluses in
the country's current account.
For 2010, the economy is expected to expand 3.3 percent as the country's exports,
the key growth engine, are likely to grow 10.7 percent on-year on the back of
positive global economic growth, it said.
KDB said the local currency is predicted to average 1,180 won to the U.S. dollar
in the second half of this year with the unit further strengthening to 1,150 won
next year.
The South Korean currency traded at 1,243.3 won to the greenback on the Seoul
market as of 2:18 p.m.
KDB's optimistic forecast came on the heels of upward revisions by the central
bank and the finance ministry. In July, the Bank of Korea upgraded its forecast
to a 1.6 percent fall from a 2.4 percent decline, with the Ministry of Strategy
and Finance also raising its outlook to minus 1.5 percent from a 2 percent
contraction.
The South Korean economy, Asia's fourth largest, grew a better-than-expected 2.3
percent in the April-June period from three months earlier, bolstered by
resilient outbound shipments.
pbr@yna.co.kr
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