LEAD) S. Korean economy faces uncertainties despite recovery: gov't assessment

(LEAD) economy-assessment

((ATTN: ADDS state-run KDI's assessment in 5th para)
SEOUL, Jan. 7 (Yonhap) -- South Korea's economy continues to recover from a steep
downturn precipitated by the global recession but it remains too early to say
whether it has staged a full-blown rebound as uncertainties linger both at home
and abroad, a government report showed Thursday.

"Indicators are showing that production, private consumption, investment and
exports continue to recover, with financial markets gaining stability," the
Ministry of Strategy and Finance said in a report.
"Though the economy keeps recovering and has passed the worst phase of the
crisis, it is still tough to say that the recovery has gained a solid footing,"
it noted.
The ministry cited the sluggish private sector as a downside risk weighing on the
pace of the economic recovery. Also cited were oil prices and other external
factors that dim the business outlook for Asia's fourth-largest economy.
In a similar report on the same day, the state-run think tank Korea Development
Institute said that the economy appears to "continue its improvement trend" with
continued growth in exports and investment.
The upbeat assessments by the government and the think-tank come as the economy
is making a faster-than-expected rebound from what was the worst downturn in more
than a decade.
South Korea has unveiled a diverse array of economic stimulus measures including
expanded fiscal spending, tax cuts and sharp interest rate cuts aimed at
bolstering domestic demand and kick-starting the sluggish economy.
The government now estimates that the nation's economy grew 0.2 percent last year
and that it will expand 5 percent this year.
Despite the improving signals, the ministry said it will keep pushing for
stimulus measures and frontloading of its budget to prop up the economy as it
faces "huge" uncertainties at home and abroad.
"To accelerate sustained growth, the government will continue its expansionary
macroeconomic policy for some time and carry out its already-allocated budget
spending swiftly," the ministry noted.
kokobj@yna.co.kr
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