Gov`t to maintain expansionary economic policy in 2010: source

SEOUL, Nov. 24 (Yonhap) -- The government is expected to maintain its
expansionary economic policy stance in 2010, to help push up the country's growth
potential and fuel development of new eco-friendly industries, a government
source said Tuesday.
South Korea this year countered the worldwide economic slump by increasing state
spending, passing a 28.4 trillion won (US$24.6 billion) extra budget in late
April. The money has been used to start large-scale social infrastructure
building projects, support so-called green growth industries and stimulate
private consumption.
"This year's expansionary stance benefited the overall economy, but in order to
keep alive the forward momentum there is a need to pursue a state-led supply
increase strategy in the new year," the official at the Ministry of Strategy and
Finance said.
The official, who declined to be identified, said that maintaining the
expansionary policy position could help raise the country's growth potential
rate, that may have fallen to the 3 percent range from around 5 percent a few
years ago.
The potential growth rate refers to the growth rate that could be achieved with
full employment and a complete use of capital. In other words, it refers to the
growth rate that a nation can achieve without inducing fallouts.
Spending more can also benefit private consumption, business investment and
trade, which is showing signs of making a comeback.
The state-run Korea Development Institute forecast that South Korea will pull off
growth of 5.5 percent in 2010, while the Organization for Economic Cooperation
and Development predicted Seoul will avoid negative growth this year. The
Paris-based organization said the country's gross domestic product will edge up
0.1 percent in 2009 compared to the year before.
The government will come up with details on its economic policy next month, with
policymakers predicting it will give support to low carbon growth sectors, the
service industry and improving labor productivity.
yonngong@yna.co.kr
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