By Yoon Ja-young
Bank of Korea (BOK) Governor Lee Ju-yeol hosted a breakfast meeting Friday for a group of top conglomerate executives to enlist their support for the government's plans to boost the economy.
Lee's efforts could be understood better later in the day when the BOK released economic data showing gross domestic product (GDP) quarterly growth of 3.2 percent from a year earlier - the lowest in five quarters.
Quarter-on-quarter growth was 0.9 percent.
This means that there are no real signs of a significant rebound despite a massive stimulus package from Finance Minister Choi Kyung-hwan.
Most economists agree it will take some time until the economy gets back on a visible recovery track.
Kim Chang-bae, a research fellow at the Korea Economic Research Institute, said the indices only confirmed that the economy was still in poor shape.
"Despite the government's effort to boost the domestic economy, it is still too early to see the effects. External conditions also got worse," he said.
He did expect, however, the economy to improve from next year as the government measures start to take effect.
"The International Monetary Fund (IMF) expects the global economy to be in better shape next year. If we take that as a fact, the Korean economy will also turn for the better," he said.
Kim Jong-su, an economist at Taurus Investment and Securities, noted that consumption has turned toward recovery. He said that exports and facility investments aren't pessimistic either when looking at an overall trend.
"The United States will lead, and the EU will also get better. Exports will then likely pick up, positively affecting the domestic economy."
During the breakfast meeting, BOK Governor Lee urged the CEOs to invest in the economy.
In the meeting, which had CEOs of the country's leading businesses present, including Samsung, Hyundai Motors, Hyosung, POSCO, and Korean Air, Lee said the country's growth is not solid, although it is in better shape compared to other nations.
He added that businesses should lead economic growth, pointing out sluggish investment in Korea after the global financial crisis. "Investment was around 8 percent of GDP last year. In the 2000s, it hovered above 12 percent," he said.
The governor said the central bank cut the key rate to trigger growth, despite concerns over household debt. "It is my earnest wish that the key rate cut will lead to investment," he said.
However, economists say businesses are not likely to increase investment.
"Businesses invest when they have a positive outlook. Now they have more than enough cash. The key rate cut doesn't contribute to corporate investment," Kim at Taurus said.
Kim at the Korea Economic Research Institute added "businesses will be conservative in investment as they still don't have confidence in the economy."
"When you do a survey, most businesses say economic conditions determine their investment. The interest rate doesn't matter," he added.
.jpg/dims/resize/740/optimize) |
Lee's efforts could be understood better later in the day when the BOK released economic data showing gross domestic product (GDP) quarterly growth of 3.2 percent from a year earlier - the lowest in five quarters.
Quarter-on-quarter growth was 0.9 percent.
This means that there are no real signs of a significant rebound despite a massive stimulus package from Finance Minister Choi Kyung-hwan.
Most economists agree it will take some time until the economy gets back on a visible recovery track.
Kim Chang-bae, a research fellow at the Korea Economic Research Institute, said the indices only confirmed that the economy was still in poor shape.
"Despite the government's effort to boost the domestic economy, it is still too early to see the effects. External conditions also got worse," he said.
He did expect, however, the economy to improve from next year as the government measures start to take effect.
"The International Monetary Fund (IMF) expects the global economy to be in better shape next year. If we take that as a fact, the Korean economy will also turn for the better," he said.
Kim Jong-su, an economist at Taurus Investment and Securities, noted that consumption has turned toward recovery. He said that exports and facility investments aren't pessimistic either when looking at an overall trend.
"The United States will lead, and the EU will also get better. Exports will then likely pick up, positively affecting the domestic economy."
During the breakfast meeting, BOK Governor Lee urged the CEOs to invest in the economy.
In the meeting, which had CEOs of the country's leading businesses present, including Samsung, Hyundai Motors, Hyosung, POSCO, and Korean Air, Lee said the country's growth is not solid, although it is in better shape compared to other nations.
He added that businesses should lead economic growth, pointing out sluggish investment in Korea after the global financial crisis. "Investment was around 8 percent of GDP last year. In the 2000s, it hovered above 12 percent," he said.
The governor said the central bank cut the key rate to trigger growth, despite concerns over household debt. "It is my earnest wish that the key rate cut will lead to investment," he said.
However, economists say businesses are not likely to increase investment.
"Businesses invest when they have a positive outlook. Now they have more than enough cash. The key rate cut doesn't contribute to corporate investment," Kim at Taurus said.
Kim at the Korea Economic Research Institute added "businesses will be conservative in investment as they still don't have confidence in the economy."
"When you do a survey, most businesses say economic conditions determine their investment. The interest rate doesn't matter," he added.
