S&P forecasts S. Korean economy to expand 4.3 pct in 2010

By Lee Youkyung
SEOUL, Sept. 25 (Yonhap) -- Standard & Poor's said Friday the South Korean
economy is expected to expand 4.3 percent next year on rising demand in emerging
markets, giving a more optimistic outlook than the Korean government's earlier
prediction.
The New York-based global financial services company forecast in a report that
the Korean economy will shrink 1.3 percent this year and expand 4.3 percent in
2010, as resilient emerging markets in the region are boosting demand and
business sentiment.
"Korea's earlier-than-expected improvement is being helped by the government
front-loading its fiscal spending, the won weakening, and improvement in consumer
and investment confidence," said Subir Gokarn, Asia-Pacific Chief Economist at
Standard & Poor's, in a report.
Standard & Poor's gave a brighter forecast than was previously estimated by the
government. South Korea's Finance Minister Yoon Jeung-hyun said last week that
annual growth targets stood at negative 1.5 percent for 2009 and positive 4
percent for 2010 for Asia's fourth-largest economy.
The local currency's recent gain may slow growth, but it is an indication of
improving sentiment and will lower the cost of capital goods, Gokarn added.
South Korea's open economy left the country susceptible to the U.S.-sparked
global financial squeeze and steep declines in trade, the report said. But
increased trade with regional partners will help exporters, particularly Korean
machinery and equipment makers, as those markets are predicted to bounce back
quickly from the downturn.
"Over the years, there has been a dramatic shift in the destination of Korea's
merchandise exports. In 2008, 51.5% went to the Asia-Pacific region and only 12%
to the U.S., which augurs well for the Korean economy," Gokarn said.
"Booming neighboring economies have translated into greater demand for Korean
primary exports of machinery and equipment," he added.
ylee@yna.co.kr
(END)