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No early boost for Korean economy
SEOUL, South Korea (Reuters) -- South Korea's finance minister said on Monday the government was not considering any special stimulus package to deal with fallout from the U.S.-led military campaign on Iraq and tensions with North Korea. Finance Minister Kim Jin-pyo, speaking at an economic policy meeting with business leaders, said it was not desirable to introduce economy-boosting steps, as the actual outbreak of war in Iraq had begun to reduce uncertainties. "It is true the economy is faced with many uncertainties, such as a war in Iraq, North Korea's nuclear plans and nervousness about the new government's policies," Kim said. "But it is still feared that big boosting steps would spur property speculation and other side effects." Kim reiterated the government's economic contingency management in the wake of war in the Middle East would be focused on advancing budget spending and on relaxing the remaining regulations on corporate investment. Latest figures show South Korea's economy grew 6.2 percent in 2002, but its growth rate is slowing. Its currency, the won, is trading at 1250 to the U.S. dollar on Monday, while the stock market is relatively flat. In afternoon trade, the benchmark Kospi index is down 0.06 percent to 575.41. The government is scheduled to announce detailed economic policies later this week, outlining the new administration's corporate reform plans and ways of strengthening economic potentials. The South Korean economy, Asia's fourth-largest, has looked increasingly weak over the past few months as it has been buffeted by worries over a nuclear stand-off with North Korea and a recent $1.2 billion corporate accounting scandal. President Roh Moo-hyun vowed on Thursday to cushion the impact of the Iraq war on the economy, which a senior aide to Roh said was weakening more rapidly than expected. The central bank also said it was staying on high alert but doused hopes of a rate cut. Economists have said South Korea has plenty of scope on both the monetary and fiscal fronts to kick-start the slowing economy. Commerce, Industry and Energy Minister Yoon Jin-shik said South Korea was unlikely to experience any energy supply problems even if the war in Iraq dragged on longer than expected. Yoon said South Korea, the world's fourth-largest crude oil importer, had already taken measures to maintain a stable energy supply during the war. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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