IMF Mission Press Statement on Article IV Discussions in Korea
In the mission's view, the immediate outlook is bright. We believe that Korea's economy will grow by about 5¨ö percent this year, somewhat faster than the government expects. The main reason for our optimism is that Korea is continuing to benefit from its integration into the world economy. Exports are growing rapidly, because the global economic expansion is creating a strong demand for Korea's products, such as its electronics, cars, and ships. Meanwhile, domestic demand is robust, ensuring that growth remains well-balanced.
The outlook, however, is not without risks. Given Korea's heavy dependence on imported oil, higher oil prices could constrain growth. In addition, a tightening of global financial conditions could lead to higher domestic interest rates, which would put renewed pressures on highly-indebted households and small- and medium-sized enterprises. To guard against the risks from higher interest rates, financial institutions should be encouraged to share more information with credit bureaus, because such information would allow lenders to respond to risks in a precise fashion, rather than by bluntly curbing credit, thereby endangering growth.
Over the longer-term, Korea faces a significant challenge, because the population is aging while competition from the rest of the region is growing. How should Korea respond? The answer, in our view, lies in furthering Korea's integration into the world economy. Just as the manufacturing sector was thrust into the global arena a few decades ago, with great success, now the same remedy is necessary for the service sector. And the mission is pleased that this is exactly what the government plans to do. Specifically:
We support the government's plans to develop the financial sector, by liberalizing the foreign exchange system and deregulating the capital markets. In this effort, we would stress the importance of putting in place regulations to prevent conflicts of interest, and to impose heavy sanctions if violations of these regulations occur.
We also support the government's plans to open up and deregulate non-financial services.
- Finally, we welcome the efforts to deal with the long-term fiscal challenges, and would emphasize the importance of restoring the national pension system to financial health.
In sum, Korea is moving in the right direction, taking steps to create a knowledge-based economy for the 21st century. For this reason, we remain optimistic about the country's economic future. These conclusions will be elaborated in our annual consultation report which will be presented to the IMF Executive Board later this year.
IMF Korea (Tel: 82-2-502-6218)
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2008년 10월 6일 16:30
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2008년 8월 6일 17:21