KDI Says, “Too Early for Optimism on Economic Recovery”



KDI said it’s too early to be too optimistic about the economic outlook, as the economy faces a number of uncertainties including the global financial-market unrest.

Korea Development Institute (KDI), the state-run research institution, said Thursday that it is too early to say that South Korea is on the way to economic recovery despite some economic indicators pointing to improvement.

“The local economy is continuing its recovery trend and the global economic slump is showing signs of easing,” the Ministry of Strategy and Finance (MOSF) said in a monthly economic outlook report today.

“Still, it’s too early to be optimistic about the economic outlook as there are uncertainties in the global markets, concerns about rising oil and the recovery is weak,” the MOSF added.

KDI shared echoed the government's view in a similar monthly report.

"South Korea’s economy is still considered to be in a recession stage, although some economic indicators are showing improvements," the KDI said, citing sluggish consumption and facility investment.

The assessment by the government and the KDI come amid growing optimism that the economy might be bottoming out and indeed may have already hit its lowest point amid improving indicators.

Adding to the optimism, the Organization for Economic Cooperation and Development (OECD) said in a report that South Korea will show the fastest economic recovery among member countries.

According to government data, South Korea's industrial output shrank 8.2 percent in April from a year earlier, decelerating from a 10.5 percent on-year decline in March. From a month earlier, output rose 2.6 percent, the fourth consecutive month of expansion.

Sales of consumer goods in the same month fell 4 percent from a year earlier after declining 5.2 percent in March.

Corporate investments, however, remained weak amid cloudy economic outlooks. Facility investments plunged 25.3 percent in April from a 23.3 percent decline a month earlier.

Exports, the nation's main growth engine, also went down. Overseas shipments declined 28.3 percent in May after falling 19.6 percent the previous month. The ministry forecast that slumping exports could lead to a contraction in industrial output in May.

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