Korean economy is expected to enter a slow recovery stage in the second half of this year. The GDP growth during this period will be -0.5%, which is 3% point higher than that in the first half of 2009. This rapid recovery is partly due to the government's aggressive stimulus package such as supplementary budget spending and monetary policy. But, compared to the recovery phase in the past-1998 currency crisis, the speed of the rebound is expected to be much slower because it would not be supported by the sharp increase in the private consumption and the fixed investment.
Private consumption growth will record -0.8% during the second half and -2.0% for 2009, which is the largest drop since the currency crisis of 1998. Despite the recent improvement of consumer confidence, its effect on the private consumption will be restrictive because the stabilizing asset markets condition is not likely to be immediately followed by the improvement in the real sector.
The fall in equipment investment is expected to be somewhat subdued in the second half compared with the first half, yet it will remain sluggish, marking -11.9%, due to highly uncertain investment conditions. The construction investment growth is going to come up with 1.8% in the second half. Increase in construction investment in the first half was mostly due to the increased SOC investment by government and public enterprises.
Exports in the second half are projected to decrease by 9.0% due to the slow recovery phase in the global economy. Meanwhile, imports, with continuing slump in domestic demand, are expected to continue to fall by 16.1% in the second half.
Private consumption growth will record -0.8% during the second half and -2.0% for 2009, which is the largest drop since the currency crisis of 1998. Despite the recent improvement of consumer confidence, its effect on the private consumption will be restrictive because the stabilizing asset markets condition is not likely to be immediately followed by the improvement in the real sector.
The fall in equipment investment is expected to be somewhat subdued in the second half compared with the first half, yet it will remain sluggish, marking -11.9%, due to highly uncertain investment conditions. The construction investment growth is going to come up with 1.8% in the second half. Increase in construction investment in the first half was mostly due to the increased SOC investment by government and public enterprises.
Exports in the second half are projected to decrease by 9.0% due to the slow recovery phase in the global economy. Meanwhile, imports, with continuing slump in domestic demand, are expected to continue to fall by 16.1% in the second half.