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BOK: recovery to be 'very slow'
Writer : Sender
Nov 11, 2009
The world's major economies will not likely fall into a double dip recession but will recover "very slowly," Korea's central bank said in a report yesterday.
According to the Bank of Korea, a double-dip recession will come only if another default crisis on the scale of the bankruptcy of the U.S.-based investment bank Lehman Brothers in September 2008 takes place, or if governments end their stimulus policies before the private sector shows signs of independent recovery.
But the report called both those scenarios unlikely, because drops in U.S. home prices are slowing and the governments of major economies will likely continue policy boosts.
"However, major economies' recovery from the global financial crisis that resulted from the housing bubble will be much slower than that from the bursting of the IT bubbles [in the early 2000s]," the BOK report said. "The home price bubble burst is longer term, inflicting more serious damage on the general economy and greater shocks to the financial system."
The report is attracting attention as it comes ahead of tomorrow's monetary policy meeting, where the BOK will decide the month's key rate.
Nearly nine out of 10 Korean bond experts forecast the central bank will maintain a record low rate of 2 percent at the meeting, the Korea Financial Investment Association said yesterday.
According to the association of investment companies, 133 or 88.7 percent of the 150 bond dealers polled bet the rate would hold. Yet even this overwhelming majority was down from 91.2 percent in the October poll and from 100 percent in the polls between June and September.
"Uncertainties about the global economy remain, and the job report and other indicators released last week from the United States have increased doubts about an economic recovery," Daishin Economic Research Institute said in a report on Monday.
The U.S. Labor Department report showed last week that the unemployment rate jumped to 10.2 percent in October, the highest level since 1983, and payrolls fell by 190,000, more than expected by experts. The country is one of Korea's major export markets.
"The rises in real estate prices and mortgage loan provisions are slowing and consumer inflation in October was 2 percent [on-year], even lower than the BOKs target range," Daishin said in the report. "The BOK will likely raise the rate in the first quarter of 2010."
(Source: JoongAng Daily)
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