ROK's Economy Forecast to See 5 Percent Growth in 2006

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ROK's Economy Forecast to See 5 Percent Growth in 2006

Oct 13, 2005


ROK's economy is predicted to grow 5 percent in 2006, up from this year's estimated 3.9 percent growth, bolstered by rise in domestic demand and solid growth in exports, according to a report released on Oct. 12 by the Korea Development Institute (KDI).

"ROK's export is expected to see solid growth next year thanks to recovery in information technology and world economic growth," said the report. "Private spending and facilities investment will gain further momentum along with recovery in job market and income growth.

Private spending is forecast to grow 4.6 percent in 2006, up from this year's 3.5 percent expansion. Facilities investment is expected to rise 8.5 percent, compared to 4.6 percent expansion of this year.

Regarding on monetary policy, the report suggests that the Bank of Korea, central bank which determines ROK's monetary policy, change its stance on monetary policy by modifying its low interest policy to curb inflation.

The report also predicted that inflation in consumer price would rise to 3.1 percent next year, compared to this year's estimated 2.9 percent.

"With ROK's economy gaining momentum, consumer prices have turned upward and expectation for a price increase has been mounting," the report said. " Increasing oil price and strong dollar are also exerting inflationary pressure."

The report also added, "As it needs some time for monetary policy of the central bank to bring its positive effect on ROK's economy, the government should take preemptive measures to curb inflation to minimize its negative effects on the economy."

By Brett Suh

Source: Yonhapnews

 

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