Economy could fall into protracted slowdown: KDI

Korea's economy has continued to slow down since the second half of last year and it could fall into a protracted slump if advanced countries move to scale back on their debt leverage, a state-run think tank said Friday.

The Korea Development Institute (KDI) also advised a government push for "structural reforms" aimed at strengthening the country's growth potential with a focus placed on macroeconomic stability.

"The eurozone economic slump, a delayed recovery in the U.S. economy and slowing growth in China placed the global economy on a weak footing on the whole," the KDI said in a report submitted during a meeting presided over by Finance Minster Bahk Jae-wan and attended by private sector experts.

"With demand weakening at home and abroad, our economy has also been experiencing a continued slowdown since the second half of last year," it added.

The KDI report cited steadily increasing employment, price stability, and the slowing rate of household debts as some positive signs but expressed concerns that future possible deleveraging by advanced countries could result in a protracted economic slowdown for Korea.

"Accordingly, it is necessary (for the government) to push for micro structural reforms aimed at beefing up growth potential, while focusing on stability in carrying out macroeconomic policies," the think tank said.

The assessment comes after the Bank of Korea earlier announced that the country's gross domestic product grew 0.2 percent during the July-September period from three months earlier. This marked the slowest on-quarter growth since the last quarter of 2009.

Private sector experts attending the meeting mostly agreed that the economy might have touched the bottom during the third quarter and expected that it could stage a modest rebound going forward. (Yonhap)