By Na Jeong-ju
Staff Reporter
Downward pressure on the country's economy is expected to ease in the months to come in line with improving external conditions, while inflation risks will decrease, an economist said Monday.
``It is likely that economic growth will pick up once concerns over external negatives, such as high oil prices and credit problems in the United States, start easing,'' Kim Jae-eun, an economist at Hana Daetoo Securities, said in a report. ``The upward pressure on consumer prices will also lose steam in line with stabilizing commodity prices. Inflation risks will decrease beginning in the second half.''
The Lee Myung-bak government is expected to implement construction projects to spur economic recovery and to attain 6-percent growth goal while taking measures to curb inflation, Kim said.
Downside risks have weighed on the economy, pulling down stock prices and prompting a rise in inflationary pressure here. However, the current cycle of slowdown will be short-lived as the country's economic fundamentals are still strong, the analyst said.
The Bank of Korea (BOK) is expected to leave its key interest rate for April unchanged at 5 percent for the eighth straight month as growing inflation risks outweigh concerns about a slowdown. The central bank's Monetary Policy Committee, headed by Governor Lee Seong-tae, will decide on the benchmark rate on Thursday.
Many economists say that the bank will slash the rate sometime in the second half to spur economic growth.
The country faces growing inflationary pressure as prices of oil, grain and other commodities have risen. External risks may pull growth rates down and increase volatility in the financial market, but the situation will see a turnaround in the second half, Kim said.
Private institutes have cut their forecasts for the country's economic growth, reflecting a faster-than-expected slowdown of the U.S. economy and financial market unease. However, data showed consumer prices remained above the BOK's target range of 2.5 to 3.5 percent for the fourth consecutive month in March.