No pump-priming measures for foundering economy

The Korean economy is expected to take a beating in the first half of next year under the influence of restructuring but the government will not take pump-priming measures to cope with the economic downturn, a presidential aide vowed Tuesday.

However, the government will push ahead with measures to invigorate local economies through urban home-building efforts and renovation work on outdated residential areas.

Lee Ki-Ho, chief economic aide to president, announced the government¡¯s policy plans in a meeting Tuesday with economic editors of local dailies at the Press Center in central Seoul.

In the meeting, he predicted that the current turmoil in the Korean economy would likely last through the first half of next year.

Regarding a controversial plan to create a new urban area in Pangyo, south of Seoul, Lee said that the final decision on the issue would be made after further consultations between the government and ruling party. He added that the government would decide by year-end whether to extend a restriction on construction in the area but said plans to establish new urban areas in other provinces would be pursued as scheduled. Lee said that the main framework for domestic bank mergers, a key part of the ongoing second-phase restructuring, would also be worked out by year-end and that the government set the deadline to prevent banks from dragging their feet on reform efforts. He emphasized that there was no change in the government's policy to have banks merge with each other on a voluntary basis and that the government would advise them on the proper way to go about joining forces.