Economic situation, more unstable than expected; Gov`t

The government is planning by June to work out comprehensive measures, including revised macroeconomic goals, to cope with lackluster exports, a poor economic growth rate, an unstable exchange rate, rising consumer prices and wildly fluctuating stock prices. It also intends to address within the first half pending challenges like selling Korea Life Insurance and Hyundai Investment Trust and Securities.

Said a government official: ``We will have to readjust the overall economic goals for the year unless the Japanese and U.S. economies recover in a short period of time.`` He noted that the government will closely monitor external economic trends and take necessary measures.

Facing problems in every economic sector, the government on Apr. 7 held its first cabinet meeting since the reshuffle under the supervision of President Kim Dae-Jung. In the meeting, Deputy Prime Minister and Finance-Economy Minister Jin Nyum said that the government would work out countermeasures after examining global economic trend over the next three months. ``Based on the economic situation during the first five months of this year as well as future prospects, we will work out a comprehensive measures in June,`` he said.

It is the first time that the government officially announced that it would adjust its macroeconomic goals.

The government plans to lower Korea`s annual economic growth rate target, which was set at 5-6 percent, considering the fact that the overall economic situation has deteriorated, and raise the target for consumer price increases from the original target of 3 percent.

The government also plans to work out economy-boosting measures focusing on rural housing construction, while maintaining public utilities charges at stable levels.

Chon Chol-Hwan, governor of the Bank of Korea, reported that the central bank would leave the foreign exchange rate to the market mechanism and intervene only in an emergency situation.

President Kim noted that the economic team should work closely to keep prices, the exchange rate, interest rates and other macroeconomic indicators at stable levels.

``The Korea economy is must be influenced by global economic trends, whether we like it or not,`` said Kim. ``As the U.S. and Japanese economies are facing difficulties, we might have to diversify export markets to the Middle East, South and Central America. We also need to work hard to boost exports of parts and materials.``

Kwon Soon-Hwal shkwon@donga.com