Another economic crisis unlikely: Coe

¡°Chances are slim that Korea would face another economic crisis like one that occurred in 1997-98, so the nation should take care not to exaggerate the possibility of another crisis,¡± said David Coe, the International Monetary Fund¡¯s (IMF) senior representative in Seoul. But he advised the nation to step up efforts to restructure the corporate sector and warned that if banks continue to lend money to nonviable companies, in the worst case it could lead to a financial crisis.

Coe made the remarks at a news conference to commemorate the expiration of the nation's stand-by agreement with the IMF, held at the government office building in Kwachon, south of Seoul, Monday.

At the meeting, he said that another economic crisis is unlikely for Korea thanks to an expansion of foreign exchange holdings, a reduction of short-term external debts and a favorable balance of international payments.

On the won's recent sharp slide against the dollar, he said that it was in line with the overall falls of Asian currencies.

He noted that short-term prospects for the Korean economy have markedly deteriorated in the past six months. But he attributed it largely to external factors beyond the nation's control, such as rises in international oil prices, slumps in international stock markets and prospects of a U.S. economic downturn.

He predicted that the Korean economy would continue to face difficulties until the first half of next year, but would rebound in the second half. In order to prevent the economy from falling into a short-term slump, he urged the Korean government to expand its financing rather than lowering interest rates.