By Lee Hyo-sik
The South Korean economy is projected to expand by 4.8 percent in 2008 from a year earlier on strong exports and recovering domestic consumption, despite record-high oil prices and other external negatives.
Consumer prices are expected to increase at a faster pace this year because of rising prices of oil and other commodities, while the economy will likely create 300,000 new jobs.
In its yearly economic management plan announced Wednesday, the Ministry of Finance and Economy said the world's 13th largest economy will grow at a faster pace in the second half than in the first half, putting this year's growth projection at 4.8 percent.
But the estimate is substantially lower than the 6 percent growth target set by the President-elect Lee Myung-bak's transition committee. Lee will be sworn in as the country's 10th President on Feb. 25.
The ministry said it did not take into account Lee's policy initiatives aimed at boosting economic activity, indicating it could revise this year's growth projection upward after the former Seoul mayor takes the country's highest office.
``There are a number of downside risks facing the Korean economy. They include rising oil prices, a U.S. economic slowdown, increasing inflationary pressure around the world and the global financial market instability in the wake of U.S. subprime mortgage defaults,'' said Yim Jong-ryong, director general of the ministry's economic policy bureau.
However, he expected exports to continue to perform strongly this year, despite a host of external negatives. ``In particular, a rise in consumer spending and corporate facility investment will likely provide a boost to the economy.''
The ministry projected domestic consumption will expand 4.5 percent this year, up from an estimated 4.4 percent gain in 2007. Corporate investment is expected to increase by more than 7 percent year-on-year, with the construction investment jumping 3.5 percent.
Exports are forecast to expand 11 percent in 2008, with imports growing 12.5 percent, turning the country's current account balance neutral from years of surplus.
Also, the government expects the economy to generate up to 300,000 new jobs next year, fewer than the President-elect Lee's promise of 600,000. Consumer prices are projected to increase at a faster pace by more than 3 percent this year on rising prices of crude oil, grains and other commodities.
The government said it will help create a business-friendly environment to encourage companies to expand investment and create jobs. To strengthen the country's growth potential, it will ease regulations, nurture innovative venture companies, and help expand research and development activities.