South Korea Sees Growing Economic Momentum Toward Full Recovery
(Bloomberg) -- South Korea sees growing momentum for a faster-than-expected economic recovery and seeks a complete exit from the pandemic slump this year, a senior official said.
“If last year was about hanging in there, this year is about the economy rising back up for sure,” Vice Finance Minister Lee Eog-weon said Thursday in a meeting with foreign media. “We’ll make sure policy will help maintain the momentum for recovery.”
South Korea joined China last quarter in surpassing the pre-pandemic scale of its economy, reporting a 1.6% expansion that easily beat the economists’ consensus.
Lee said the government aims to achieve a “full economic recovery” this year built on strong and continued momentum that encompasses growth across as many sectors as possible.
South Korean consumption trailed the growth in exports and investment last quarter, while jobs have yet to return to a level seen before the virus outbreaks. Lee said the pandemic remains a threat to consumption, but added increasing credit-card use in April and a 14.9 trillion won extra budget ($13.2 billion) passed in March are factors that bode well for the broader economy.
Finance Minister Hong Nam-ki has said he expects a mid-to-upper 3% expansion in the economy this year, higher than the 3.2% rise expected earlier. Some economists in the private sector are more optimistic, with Goldman Sachs and JPMorgan among those seeing 4%-plus growth.
Lee said government estimates tend to be more restrained than private institutions when the economy is on its way back up. The ministry plans to release a new outlook in June.
South Korea’s sovereign credit-default swaps or the cost of ensuring the nation’s bonds against non-payment has dropped to 19 basis points, the lowest since the 2008 financial crisis. In an earlier statement Thursday, the finance ministry said the decline reflects “positive views” from foreign investors on its economy
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