By Yoon Ja-young
Staff Reporter

The Korean economy will slide further before a recovery, according to a senior official at Fitch Ratings.

James McCormack, chief of Asia Pacific sovereign ratings at the global credit rating agency, said that Fitch expects the Korean economy to shrink by 5.1 percent in an e-mail interview with Reuters.

``For an open economy like that of Korea, we anticipate lags in terms of the effects of weaker exports on domestic demand,'' Reuters quoted him as saying.

``This implies that economic growth rate is likely to decline further before a recovery is firmly established, consistent with Fitch's forecast.''

He said economic policies would help offset part of the decline from net trade. However, the downward trend can't be reversed by policies alone when considering the magnitude of the reduction in exports and industrial production, he added.

Amid rebounds in the stock market and the real estate market, optimism is rising in the country regarding the economy. However, voices are growing that the optimism is not backed by an improvement in economic indicators. Strategy and Finance Minister Yoon Jeung-hyun also showed a reserved stance on the optimism, saying that the International Monetary Fund (IMF) is likely to cut its global economic growth outlook, which would inevitably affect the export-dependent economy.

The IMF had expected the Korean economy to shrink by 4 percent this year, while the Bank of Korea estimated a 2.4 percent contraction.

chizpizza@koreatimes.co.kr