Korean economy to grow 4.5% this year: Coe

The Korean economy will expand by about 4.5 percent this year, which is in line with the outlook for the U.S. and global economies, said David Coe, the International Monetary Fund (IMF)`s senior resident representative in Seoul, in a speech Wednesday.

Coe made the prediction in an address titled "Prospects for the Korean Economy after the IMF Program," at the Korea Press Center. During the Korea Press Foundation-sponsored lecture, Coe said the outlook for the Korean economy is bright in the mid- and long-term, although short-term prospects are rather gloomy.

He noted that a major task of the Korean government is to push ahead with restructuring efforts in the corporate and financial sectors and advised authorities to refrain from intervening in the market.

Concerning the disposal of the bankrupt Daewoo Motor, he said, "It seems that significant restructuring efforts are underway in the company at the moment. Now creditors and the government should look for ways to settle the issue quickly."

On the government’s policy to acquire corporate bonds of companies with low credit ratings, he said the intervention could be justified only under certain circumstances.

"If the measure aims to solve the current crisis, not to rescue Hyundai Electronics Industries (HEI), as the government argues, it could be justified," he said.

However, he warned that the measure could be seen overseas as a type of favoritism and could in turn hurt the nation`s credibility.

Yonhap