Business Sentiment Improves but Fears Linger

South Korea's business sentiment for February rebounded from an 11-year low on the government's stimulus package, but fears linger as the economy is headed for its first recession in a decade, Yonhap News reported quoting a survey Thursday.

The monthly business survey index, an indicator of corporate sentiment for the coming month, was 66 for February, compared with 52 the month before, according to the poll by the Federation of Korean Industries.

It was the ninth straight month the index recorded a reading below 100, the corporate lobby group said. A reading below 100 means the number of companies expecting the economy will deteriorate outnumbers those forecasting an improvement.

"The February index slightly rose on expectations that the government's stimulus packages may help the economy bottom out, but the real economy is rapidly falling into a recession, driven by slumping exports," the federation was quoted as saying in a statement.

The economy shrank 3.4 percent in the final quarter of 2008, marking the first contraction on an annual basis in a decade.

While the government of President Lee Myung-bak still maintains a 3-percent growth target for this year, economic data indicated the economy would slip into recession, or two consecutive quarters of contraction in gross domestic product.

South Korea's economy grew 2.5 percent last year, compared with a 5.1 percent expansion in 2007.