By Lee Hyo-sik
Staff Reporter
The government expects the Korean economy to undergo a V-shaped rebound in 2010 on the back of strong exports and recovering domestic demand. But the job market is likely to stay in the doldrums until the second half of next year.
The Ministry of Strategy and Finance projected Friday that the economy will expand by around 5 percent in 2010 from a year earlier and generate 200,000 new jobs. Asia's fourth largest economy is also expected to post a $15 billion current account surplus, with consumer prices rising by less than 3 percent.
Reflecting a faster-than-expected growth over the past two quarters, the government has become substantially more upbeat about next year's economic outlook.
In June, it estimated the nation's gross domestic product (GDP) would grow by 4 percent in 2010 and create 150,000 new jobs, with an $8 billion current account surplus and just below 3 percent inflation.
A senior finance ministry official said the economy will expand by at least 5 percent in 2010, citing brisk exports and rebounding private consumption and corporate investment. ``A number of economic research institutes at home and abroad have raised our 2010 outlook sharply. The job market will likely remain in a slump in the first half but will improve toward the year's end. The current account surplus will be smaller than this year's. But we think it will reach at least $15 billion,'' the official said.
The ministry plans to unveil its 2010 economic management plan on Dec. 10.
Yoon Deok-ryong, a senior research fellow at the Korea Institute for International Economic Policy, said the government should continue its expansionary fiscal policies through 2010 to achieve such macroeconomic goals.
``Despite improving overall economic conditions, corporate investment and other private sector activities are not strong enough to offset fiscal stimulus. Without government spending, the economy could head downward again. The most important thing is to get business investment and private consumption back on track as quickly as possible,'' Yoon said.
He also suggested the government remain vigilant against potential global financial market jitters ― such as Dubai's default ― and be ready to mobilize all possible policy measures to cushion the local financial sector from outside shocks.
On Thursday, U.S. investment bank Goldman Sachs upwardly revised its 2010 growth outlook for Korea to 4.8 percent from an earlier rate of 3.7 percent. On Nov. 19, the OECD said Korea's GDP will expand 4.4 percent next year, up from the previous 3.5 percent.
The state-run Korea Development Institute (KDI) also raised its 2010 projection for Korea to 5.5 percent from the earlier 4.2 percent, citing sharply improved macroeconomic conditions.