Bank of Korea sees 2009 economic growth slowing

South Korea's economy is set to slow sharply in 2009, the central bank said Friday, predicting growth will nearly halve from this year's estimate due to fallout from the global financial crisis.

The Bank of Korea said Asia's fourth-largest economy will grow 2 percent in 2009, compared with a revised estimate of 3.7 percent for 2008. South Korea's economy grew 5 percent last year.

"The outlook is for South Korea's economy to have difficulty in recovering growth momentum in the short term," the bank said in its outlook, citing low chances for a quick end international financial instability and continuing weakness in demand both domestically and overseas.

South Korea's export-oriented economy has been hit by the global slowdown, with exports falling sharply in November and domestic consumer spending weakening.

The Bank of Korea's 3.7 percent forecast for this year was revised down from a more optimistic 4.6 percent outlook in July before the world financial meltdown kicked in with the collapse of U.S. investment bank Lehman Brothers in September.

Still, the revised estimate remains far more optimistic than what some private economists are predicting. Swiss bank UBS, for example, sees South Korea's economy declining 3 percent in 2009.

South Korea's economy has not contracted on an annual basis since 1997, when it was hit by the Asian financial crisis that forced the government to seek a $58 billion bailout from the International Monetary Fund.

The bank estimated, however, that growth would recover in 2010 to 4 percent.

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SKorean central bank slashes key interest rate

Associated Press

Wed Dec 10

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