S. Korea should maintain stimulus policies next year: think tank

By Nam Kwang-sik

SEOUL, Dec. 1 (Yonhap) -- The head of a South Korean state-run economic think tank called on the government Tuesday to maintain its expansionary fiscal stance next year in anticipation of both domestic and external economic downside risks.

The government should also examine closely the effectiveness of temporary
stimulus measures and trends in the local property market, said Hyun Oh-seok,
head of the Korea Development Institute at a forum hosted by the Korea Chamber of
Commerce and Industry.
"In addition to expansionary fiscal policies, we would like the government to
take flexible measures suitable to the economic environment," Hyun said.
Referring to growing optimism that South Korea's economy is on the path to
recovery, Hyun said the country's key interest rate should be kept low for the
time being, and that this would contribute to the recovery by boosting
consumption and investment.
On Nov. 12, the Bank of Korea left the benchmark seven-day repo rate unchanged at
a record low of 2 percent for the ninth straight month. The central bank also
hinted that it is not in a hurry to tighten its monetary policy, due to the
still-murky outlook for the global economy.
Hyun predicted Korea's economy will expand in the 5 percent range next year,
though other institutions, including the Organization for Economic Cooperation
and Development, anticipate growth in the mid 4 percent range.
But he warned that uncertainties remain for the South Korean economy, due to
lingering volatility in the financial sector and a possible bubble in the
property market.
The local job market is forecast to improve moderately next year, Hyun said.
Deputy Vice Finance Minister Noh Dae-lae, who also attended the forum, said the
government will maintain its expansionary macroeconomic policy into next year to
create jobs, promote investment and actively address concerns over that property
market is overheating.
ksnam@yna.co.kr
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