S. Korea to avoid negative growth, expand 0.2 pct this year: gov't report

SEOUL, Dec. 10 (Yonhap) -- South Korea's economy will likely avoid negative
growth this year as it continues to make a "faster-than-expected" recovery amid
rebounding consumption, investment and other upbeat indicators, a government
report showed Thursday.

The nation's gross domestic product is forecast to grow 0.2 percent this year
before jumping 5 percent next year, according to the report by the Ministry of
Strategy and Finance. The growth forecast was unveiled as part of the
government's annual economic management plan for next year.
"During the third quarter, GDP growth returned to pre-crisis levels, continuing
its recovering trend. Private-sector consumption and facility investment also
kept upward momentum and the declining pace of inventory levels has slowed since
the third quarter, while the overall contribution from domestic demand is on the
rise," the report said.
The government's growth forecast is broadly in line with growing optimism that
the nation's economy could manage to avoid a contraction. The outlook is based on
the premise that the global economy will expand 3.1 percent and oil prices will
stay at an average of US$80 per barrel next year.
Major think tanks support such an upbeat forecast for Asia's fourth-largest
economy, saying the country is making a faster-than-expected recovery from the
steep downturn sparked by last year's financial turmoil and resulting global
recession.
The Organization for Economic Cooperation and Development recently revised its
outlook for the Korean economy, forecasting a 0.1 percent expansion this year
before rebounding 4.4 percent next year.
On Wednesday, the International Monetary Fund followed suit by forecasting that
the economy will grow 0.25 percent this year before expanding 4.5 percent in
2010.
The revisions are in sharp contrast with a year ago, when the government was
deeply concerned that the economy could contract for the first time in more than
a decade amid plunging exports and domestic demand.
Current predictions forecast that all indicators, including consumption, exports
and investment, will rebound next year, helping the nation achieve robust growth.

Under the annual economic management plan, the government expects that private
consumption will grow 0.4 percent this year before jumping 5 percent next year.
Facility investment is also expected to post a double-digit expansion of 11
percent next year, a sharp turnaround from this year's 9.8 percent decline.
Exports will likely shrink 13.9 percent this year but are projected to jump 13.2
percent annually for 2010. Imports will also rise 21.1 percent thanks to
increasing spending amid an economic recovery, compared with a 26 percent
contraction this year.
South Korea's current account surplus, however, will decline from an estimated
$42 billion for this year to $15 billion for next year, according to the report.
As for the labor market, the ministry said that the number of people employed
will increase by 200,000 next year, compared with a decline of 70,000 for this
year. Consumer prices are expected to rise 3 percent from 2.8 percent for 2009,
the report showed.
Despite the overall improvement, the government noted that it will continue its
expansionary policy stance "for the time being," pursuing active fiscal spending
aimed at propping up the economy. It will, however, "steadily normalize" its
macroeconomic policy stance in consideration of economic and job market
conditions.
kokobj@yna.co.kr
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