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S. Korean economy to gather recovery pace: finance minister

April 24, 2015

Finance Minister Choi Kyung-hwan (R) speaks to reporters during his visit to Jeju, South Korea’s southern resort island, on April 24, 2015. (Yonhap)

JEJU (Yonhap) — South Korea’s top economic policymaker brushed off concerns over bleak economic prospects on Friday, expecting the country’s economy to gather steam for a recovery down the road on the back of a series of fiscal and monetary easing steps.

Asia’s fourth-biggest economy expanded 0.8 percent on-quarter in the first quarter, picking up from 0.3 percent growth three months earlier, but stayed below the 1 percent level for four consecutive quarters, central bank data showed last week.

“Since (the economy) has failed to grow more than 1 percent in the past few quarters, I anticipate that it will surpass that level in the second quarter,” Finance Minister Choi Kyung-hwan told reporters following a meeting with tourism industry officials on the country’s southern resort island of Jeju.

While the country’s first-quarter economic expansion has been affected by an economic slowdown since last year, the economy will see its recovery quicken in the current quarter, he said.

The economy has had a slow expansion rate in the face of weak domestic demand and exports, although the Bank of Korea has slashed the policy rate by a combined 0.75 percentage point over the past few months to help the economy recover while the government has front-loaded its budget spending.

The economy’s on-quarter growth, which reached 1.1 percent in the first quarter of last year, slowed to 0.5 percent in the second quarter and fell to 0.3 percent in the fourth quarter after slightly picking up to 0.8 percent in the third quarter.

Choi said his ministry will take appropriate measures, including an extra budget, after closely monitoring economic circumstances.

Meanwhile, Choi said the government will keep its eyes on the won-yen exchange rate as the Korean won trades near a seven-year high versus the Japanese currency, sparking worries that South Korean exports may lose ground in overseas markets.

“Basically, we cannot help but follow the market,” he said, “However, if there is one-sided movement, either upward or downward, the government cannot help but watch it.”

The won’s rally versus the Japanese yen is a major concern for the country’s policymakers as the two countries directly compete in overseas markets over products ranging from electronic goods to autos.