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World Bank ups 2009 growth outlook for S. Korea
Writer : Sender
Nov 10, 2009
The World Bank has revised upward its 2009 growth outlook for South Korea's economy, saying the country's large-scale stimulus measures helped induce a faster-than-expected rebound in Asia after the region was hit hard by last year's financial turmoil.
In its latest report assessing economic conditions of major Asian countries, the bank forecast that South Korea's gross domestic product will shrink 0.7 percent this year, up from the 3.0-3.5 percent contraction it predicted in June. Growth will rebound by 3.7 percent next year, also up from its June forecast of a 2-percent advance.
The revised growth forecast is higher than the one offered in the latest report by the International Monetary Fund, which expected the Korean economy will shrink 1 percent this year, up from its earlier projection of a 3 percent shrinkage.
"A vigorous and timely fiscal and monetary stimulus in most countries in East Asia, led by China and Korea, along with decisive measures in developed economies to prevent a financial meltdown after the collapse of Lehman Brothers, have stopped the decline in activity and set in motion the regional rebound," the report said.
Hard-hit by the global financial turmoil last year and the resulting recession in major economies, the export-driven South Korean economy is feared to fall into negative growth this year for the first time in more than a decade.
Korea's exports plunged and consumption froze with companies unwilling to invest or recruit due to jitters that economic conditions could worsen at home and abroad.
The downturn, however, seems to have slowed in recent months, apparently led by the government's swift stimulus measures including expanded fiscal spending and tax reductions coupled with the lowest-ever borrowing costs offered by the nation's central bank.
During the third quarter, South Korea's GDP expanded 2.9 percent compared with three months earlier, the fastest advance in over seven year. The rebound compares with a 5.1 percent plunge posted during the last quarter of 2008.
Those figures added to upbeat mood here that South Korea's economy could avoid the first minus growth in more than a decade this year, driven by recovering exports, investment, consumption and other major indicators.
Earlier, the finance ministry assessed that the nation's economy is making a "better-than-expected" recovery, though uncertainties still remain.
The Korea Development Institute, a state-run think tank, echoed that view, saying South Korea's economy remains in the "recovery phase" as exports, consumption and other indicators are rebounding fast, driven in part by eased instability in overseas markets.
The government currently predicts that Korea's economy will contract 1.5 percent this year, the first minus growth since the 1997-98 financial crisis. Some policymakers, however, cautiously say that the nation could avoid minus growth this year, citing improving economic conditions at home and abroad.
(Source: Yonhap News)
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