S.Korea president upbeat on economy as c.bank eyed

By Yoo Choonsik

SEOUL, May 17 (BestGrowthStock) – South Korea’s president on Monday
issued his most optimistic comments on the economy since the
global financial crisis began, and days after the central bank
hinted it would start raising interest rates in a few months.

South Korea is among only a few leading economies to post
growth last year and is tipped to grow faster than its rivals
this year, but the government has so far resisted calls for
shifting interest rate policy toward tightening.

“In the first quarter, the private sector’s domestic demand
including consumption and investment has recovered almost the
level before the (global) financial crisis,” President Lee
Myung-bak said in a prepared radio speech to the country.

“At last the green light is on in the real economy,” he
added, without mentioning any specific area of weakness within
the local economy, although citing the euro zone’s instability
as a reason for the country to stay vigilant.

The central bank, the Bank of Korea, said last week the
recovery in Asia’s fourth-largest economy has become more
pronounced and strengthening domestic demand would contribute
to pushing consumer inflation higher.

Bond prices tumbled afterwards as traders and analysts took
these comments as suggesting the central bank would start
raising the policy interest rate, kept at a record-low 2
percent for over a year, during the next quarter.
[ID:nTOE64B017]

Analysts have said the Bank of Korea had already missed the
appropriate timing to shift its policy toward tightening and
the country’s most influential government think-tank on Sunday
urged the central bank to raise interest rates. [ID:nTOE64E00B]

The government expects the economy to grow 5 percent this
year after a 0.2 percent gain last year, but many prominent
agencies — including the central bank and the government
think-tank — see faster growth.

Lee’s upbeat comments on the economy also came just two
weeks before the election on June 2 to select heads of 16
provincial governments and hundreds of provincial council
members, widely seen to be a mid-term assessment by voters on
Lee’s presidency.

The former chief executive of a leading construction
company and mayor of the capital Seoul, Lee took power in 2008
for a single five-year term by promising to sharply boost the
country’s economic growth.

The ruling camp boasts the government has overcome the
financial crisis quickly and raised the country’s position in
the global community, whereas the opposition parties criticise
Lee’s hard-line policy toward communist North Korea.

South Korea will host the summit meeting of the Group of 20
leading economies in November and the nuclear summit in 2012.
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(Editing by Jerry Norton)

S.Korea president upbeat on economy as c.bank eyed