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The state-run Korea Development Institute (KDI) sharply slashed its 2009 growth outlook for Korea, Wednesday, to 0.7 percent from a projection of 3.3 percent it made in November.

It said the economy will shrink 2.6 percent in the first half of the year from a year ago and gain some momentum in the latter half on improving global economic conditions, expanding 3.8 percent from the previous year.

It also forecast that the world's 13th largest economy will lose more jobs than it will generate this year, presenting a bleak picture for workers and job seekers here; with private consumption, corporate investment and exports all contracting in the first half.

The think tank called on the government to take aggressive fiscal expansionary steps to bolster the sagging economy while injecting more capital into banks and other financial services companies to help them drastically restructure struggling businesses so that they can stay competitive.

The 0.7 percent growth projection is far lower than the government target of 3 percent and the Bank of Korea's 2 percent, but is in line with, or slightly lower than, those of major global investment banks and credit ratings agencies.


By Lee Hyo-sik (Staff Reporter)



# The Korea Times [Jan 22, 2009]