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| Korea Development Institute(KDI) lowered the economic growth rate for 2009 in Korea on Jan 21 from 3.3 percent to 0.7 percent. | ||
A state-run think tank, Korea Development Institute(KDI) lowered the economic growth rate for 2009 of Korea on Jan 21 from 3.3 percent to 0.7 percent, which is dramatic drop by 2.6 percent compared to the prediction figure released last November.
The downgraded forecast from KDI is much lower than the government's objective of attating 3 percent growth and also 1.3 percent below from the prediction with 2 percent growth rate released by Bank of Korea(BOK) last December.
Major local research institutes for economy including Samsung Economic Institute suggested 2 to 3 percent growth rate in 2009 whereas 9 international investment banks set the rate around 0.8 percent for Korean economy as of the end of last December.
KDI pushed the consumption from private sector down from 2.2 percent released last November to 0.1 percent along with the equipment investment from 1.9 percent to negative 7.7 percent, putting the construction investment a bit higher from 2.7 percent to 2.6 percent.
However, the current account is expected to go into black with 1.36 million dollar increase owing to the decrease of imported products due to the drop in the oil and commodity price in spite of the gloomy expectation to see big drop in exportation.
The major reason for KDI to see 2009's Korean economy with negative forecast is that the world economy is freezing a lot faster than expected, said KDI.
When the global economy goes down rapidly, Korean exportation cannot help dropping badly because the economic situation of the world is one of the most important factors on its exports and this is happening a lot faster than most economic institutes predicted.
An official at KDI recommended, "The government should take the stance at the expansive macro-economy policy for the time being in order to minimize the impact by the global economic recession."
"The prompt and active restructuring plan for faltering companies should be started along with the financial institutes to make an effort to expand the self-capital ratio," he added.
And he highlighted that the emergency plan to inject public funds is necessary for the ailing banks which have very low capital in preparation for the possibility to witness the banks downing massively due to the recession.
By Kirim Shin
신기림 기자 kirimi99@ajnews.co.kr
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