South Korea will take a cautious approach to unwinding its economic stimulus policies in light of uncertainties at home and abroad, South Korean Finance Minister Yoon Jeung-hyun said yesterday.
Asia’s fourth-largest economy was one of the fastest to emerge from the global downturn thanks partly to aggressive stimulus measures taken by the government.
But Yoon, in a speech to foreign correspondents, cited a “lackluster” employment situation at home and recent sovereign debt worries in Dubai and the eurozone as risks.
To strengthen the foundations for longer-term growth, the Korean government would continue “active policy support in macroeconomic policies,” he said.
“It is necessary to maintain the current accommodative policy stance in order to deal with unexpected instabilities in the domestic and global market,” Yoon said.
In terms of an exit strategy, the government “will take a cautious and balanced approach” to avoid “unwinding such policies too early or maintaining interventionist measures for too long.”
Yoon said the recent slight slowdown in South Korea’s growth appeared largely due to seasonal factors such as a cold spell and heavy snow.
“Therefore, I see no reason to doubt that the economic activity will continue a moderate pace of recovery in 2010,” he added, reaffirming a projection of five percent GDP growth this year.
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