By Kang Hyun-kyung
Staff Reporter
President-elect Lee Myung-bak said Wednesday it will be tough for Korea to achieve 7 percent economic growth in 2008 as he pledged during his campaign.
Lee said the world economic outlook is dismal, as a variety of unexpected negative factors have appeared.
``Raw material prices are soaring and exchange rates are unstable. In addition, the subprime mortgage crisis has hit the global economy,'' Lee said in a meeting in Seoul with the heads of 10 public and private think tanks, including the Korea Development Institute (KDI) and Samsung Economic Research Institute (SERI).
``I am fully aware that it's not easy to make the economy grow fast. But we should do something to boost it because the situation facing working-class families is much more serious than perceived,'' Lee said.
His remark seems to mean he has already backed away from his three-point flagship pledge _ 7 percent economic growth, per capita income of $40,000 and becoming the 7th largest economy in 10 years.
The figure suggested by the President-elect is much higher than the projected rate by 13 private and public think tanks.
Previously, the KDI and 12 other think tanks projected an annual growth rate for 2008 at 4.99 percent.
During the meeting, Kim Jong-seok, president of the Korea Economic Research Institute (KERI), pointed out that the next government should prioritize stabilizing interest rates.
``It is a widely held notion that the economic outlook for this year is extremely dismal. The Lee government should adopt precautionary measures to tackle the negative impact of the unstable global financial market on the economy,'' Kim said.
Hyun Jung-taik of the state-funded KDI suggested a four-point policy designed to maximize growth potential and stimulate business investment.
The four are deregulation, labor market flexibility, education reform and early ratification of free trade agreements between Seoul and Washington.
Prof. Shin In-suk of Chung-Ang University said, ``It is impossible to achieve 7 percent growth annually. If the new government takes measures to stimulate the economy, it will only make things worse.''
Economists described signs of recession in the U.S. as a bad indicator for the Korean economy.
A recent survey showed many of the 100 leading local economists are also skeptical over Lee's inland canal project.
These economists said the project is a government-led measure to stimulate the economy, but that this is unlikely to succeed in light of the poor prospects for the global economy.
The incoming President and GNP lawmakers dismissed this skeptical view.
Rep. Park Heong-joon, head of the planning subcommittee of the transition team, told a radio program that the new government is not considering artificial measures to boost the economy.
``The strategy we are seeking to boost the economy is bolstering growth potential dramatically through investment in R&D, quality human capital and deregulation,'' Park said.
The stronger the growth potential, the more chances to achieve the 7 percent goal, he added.
The right-hand man of President-elect Lee agreed that it might be hard to achieve the 7 percent growth rate this year.
``I assume that the new government will achieve annual growth between 4.7 and 5 percent by the end of this year. Our goal is to find ways to add 1 percentage point to the projected growth rate,'' Rep. Park said.