S. Korea's economy expected to grow over 4 pct next year: finance minister

(ATTN: ADDS OECD's growth forecasts and others in para 2, 9-11)
SEOUL, Nov. 19 (Yonhap) -- South Korea's economy is expected to grow above the
government's earlier forecast next year because it is quickly rebounding from a
steep downturn, Seoul's top financial policymaker said Thursday.
The rosier outlook was in line with a number of international groups raising
their growth projections for Asia's fourth-largest economy, citing the positive
impact of government-led fiscal spending and other stimulus measures in the face
of the global recession.
"Many foreign institutions are expressing their surprise over our economy's
faster-than-expected rebound ... It is expected that next year's growth will
likely be better than the government's earlier forecast of a 4-percent
expansion," Finance Minister Yoon Jeung-hyun told a meeting of heads from major
private and state-run think tanks.
Yoon said the nation's economy is faring well and that growth has returned to
pre-crisis levels, but noted that downside risks remain, including a tightened
labor market and rising commodity prices.
"While some macroeconomic indicators are improving, employment conditions still
remain sluggish, making it difficult for ordinary people in their daily life,"
the minister said. "With a rebounding economy, oil prices and other commodity
costs could surge at anytime, which could serve as yet another drag on the
economy."
His comments came as the economy has made a robust rebound in recent months,
following the worst downturn in more than a decade, thanks to government-led
stimulus measures including tax cuts and increased fiscal spending.
South Korea has unveiled diverse economic stimulus measures by frontloading its
budget, reducing taxes and keeping its key interest rate at a record-low level --
efforts aimed at bolstering domestic demand and kick-starting the sluggish
economy.
According to the nation's central bank, gross domestic product grew 2.9 percent
in the third quarter from three months earlier, a marked turnaround from a 5.1
percent plunge in the final quarter of last year.
International bodies echoed the government's upbeat tone by raising or saying
they plan to upgrade their growth projections for the South Korean economy.
The Organization for Economic Cooperation and Development predicted that the
Korean economy will avoid negative growth for this year, saying its gross
domestic product will expand 0.1 percent in 2009 before rebounding 4.4 percent in
2010. The forecast was more optimistic than the negative 2.2 percent and positive
3.5 percent growth the Paris-based organization predicted in June.
Media reports say that the International Monetary Fund will likely follow suit
soon by offering a more optimistic view of the Korean economy.
The government, however, remained cautious against premature optimism, and has
said it will continue its fiscal support to bolster the economy.
"To get over a crisis and prepare for the post-crisis era, now is a really
critical time for us to delve into how we survive this difficult time and keep
the improving economic trend alive," Yoon said during the meeting.
Heads of the nation's nine economic think tanks who attended the closed-door
gathering shared the view that the local economy is recovering at a
faster-than-expected pace, according to finance ministry officials.
They still called for the government to stick to its expansionary macroeconomic
policy stance "for the time being" and push for exit strategies aimed at
normalizing measures after monitoring overall economic conditions.
But the participants were divided on how fast the global economy will rebound,
citing diverse downside risks such as a possibly delayed recovery in advanced
countries. But they ruled out a double dip recession in the global economy, the
officials added.
Thursday's meeting comes as the government is busy crafting its annual
economy-operation plan for next year, which is to be unveiled on Dec. 10. The
government currently anticipates that the economy will contract 1.5 percent this
year before rebounding 4 percent next year.
kokobj@yna.co.kr
(END)