Korea Targets $10 Billion Surplus in 2009 Current Account
By Yoon Ja-young
Staff Reporter
The government has lowered its economic growth target for next year to around 3 percent, 1 percentage point lower than its previous projection, and it will strive to create 100,000 jobs.
``The government is well aware that the economy is in difficulties,'' said Yook Dong-han, director general of the Policy Coordination Bureau at the Ministry of Strategy and Finance in announcing the economic management plan for 2009. The government set the plan based on the estimation that the economy would grow 3 percent next year.
This is much higher, however, than estimations by others. The Bank of Korea expects the economy to grow by 2 percent, while major global investment banks estimate 1.2 percent growth on average. UBS predicted a minus 3 percent growth for Korea, and Samsung Securities also expected minus growth next year.
Yook said the 3 percent estimation reflects policy objectives. ``The estimate is based on the presumption that the execution of deregulation and budget spending will sustain the economy,'' he said.
The government has been lowering its growth target ever since President Lee Myung-bak, who earlier promised 7 percent economic growth, took office.
The 2009 budget set in September was based on a 5 percent growth forecast, but the revised budget is based on a 4 percent target after the economy was hit by the global financial crisis.
The 100,000 new jobs expected to be created next year is higher than the central bank's prediction of 40,000. Jobs created last year recorded 282,000, but are likely to fall to 150,000 this year. The Bank of Korea (BOK) estimates the number of jobs to fall by 40,000 in the first half of next year.
The BOK is predicting a $10 billion current account surplus, and has set its inflation target at 3 percent for 2009. Consumer prices are forecast to rise 4.7 percent this year, and the current account is expected to record a $6 billion deficit.
The bank expects private consumption to grow by only 1 percent, while exports stay at a similar level, and imports dwindle by 5 percent.
Yook said the economy should get back on normal track in 2010 as the government implements measures to overcome the crisis.
The government has said it will frontload 70 percent of the budget in the first half of next year to boost the economy, create more jobs and protect low-income households.
The government has already unveiled a series of mega public infrastructure projects, which include the refurbishment of major rivers despite skepticism that the plan might develop into a controversial inland canal project. The administration has also focused on deregulation in the real estate market, but this hasn't had much effect as an economic stimulus yet.