South Korean economy to grow 4.9 percent in 2008

March 11th, 2008 - 4:50 pm ICT by admin  

Seoul, March 11 (IANS) The South Korean economy is expected to grow 4.9 percent during 2008 on a recovery of private consumption and brisk exports, global financial services firm Morgan Stanley said Tuesday, WAM news agency reported. “The growth outlook for the (South) Korean economy is stable this year on the back of higher private spending and exports. Expansion of the construction sector and higher capital investments will also substantively contribute to economic growth,” Park Chan-ik, Morgan Stanley executive director, told a press conference.

The global financial services firm’s prediction is less upbeat than the government’s 2008 economic growth target.

South Korean President Lee Myung-bak, who took office Feb 25, has pledged to raise the country’s economic growth to around 6 percent this year by easing regulations and cutting taxes.

The growth of the country’s exports is expected to slow down to 10 percent this year from 14.1 percent the previous year, but overseas shipments are expected to post a double-digit growth rate, Asia Pulse said quoting Morgan Stanley.

“Strong export demand from emerging markets like China will offset possible cooling demand from the US,” Park said, adding that the Korean economy looks less vulnerable to a possible US recession.

Park also projected that the country’s current account will likely post a deficit of $2.8 billion, a turnaround from a $6 billion surplus last year. But its deficit forecast is lower than the central bank’s $3 billion estimate and the finance ministry’s forecast of about $7 billion.

“The country’s possible full-year current account shortfall would add more downward pressure on the local currency against the US dollar. Exporters’ earnings would benefit from a weaker won (South Korean currency), coupled with the government’s plans to cut corporate taxes,” Park added.

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