By Kim Tae-gyu
Staff Reporter
Despite some rose predictions for the economic outlook, a leading private think-tank said that the economy will not recover in the latter half of this year.
The Samsung Economic Research Institute, an affiliate of Korea's foremost chaebol Samsung Group, said Wednesday the country's economy won't chalk up growth this year.
``It is a long shot for the economy to rack up growth over the latter part of the year despite the good news on the stock market,'' SERI economist Hwang In-seong said.
``The housing market is likely to languish this year. In addition, struggling companies here are highly likely to weigh on Korea Inc. down the road,'' he said.
The Korean stock market has stabilized of late as the benchmark KOSPI recovered.
The index once plunged to below the psychologically crucial 1,000 mark early March but it rebounded over the past few months to fluctuate in the neighborhood of 1,400.
Asked whether the housing market will continue to strengthen, Hwang was negative.
``Of late, the price of home prices headed north because of rich liquidity channeled into the market by the government, which has gone all-out to boost the economy,'' he said.
``The trend is not likely to continue across the country. Some areas in Seoul, such as the southern area that are designated as speculation zones, will cause some problems. But overall, home values are not likely to plague policymakers,'' he said.
With regard to the rising oil prices, SERI remained somewhat complacent.
``Imaginary demands from China and the weak dollar caused the abrupt rise in crude oil prices, which have doubled this year,'' Hwang said.
``But we regard the rise as a temporary event. Prices are likely to rise but they will not surge over the long haul. That is our view,'' he said.
Plus, SERI predicted that the Chinese economy won't keep robust growth of higher than 8 percent this year while the global financial tsunami will show signs of abating.
Although the financial distress will not disappear in the short term, the think-tank said that the worst is over.