June 5, 2009

Experts say S. Korea recovery to be slow

The South Korean economic downturn may be bottoming out but experts say there is still enough uncertainty to make the recovery a slow process.

The optimistic signs include improvement in business and consumer sentiment but they are still dogged by sluggish investment and domestic demand, Yonhap news agency reported.

Even if the economy is improving, the pace of its recovery is likely to be considerably slow, the Financial Services Commission, the country's financial regulator, said, citing private and state think tank experts. It would be difficult to see rapid recovery in the short period of time.

Bank of Korea, South Korea's central bank, also has said it is too early to make a prediction because of lingering uncertainty.

The Yonhap report said Asia's fourth-largest economy grew 0.1 percent in the last quarter from three months earlier, aided by the government's fiscal spending and rate cuts.

The central bank said the county needs aggressive fiscal spending to prevent a GDP decline. Other experts called for speedy corporate restructuring as a delay there would hurt the recovery.

South Korea plans to spend more than $16 billion to buy bad debts and purchase assets of ailing companies this year to help speed up corporate restructuring.