KDI “Next Year`s Economic Growth Rate 4.1 Percent“

The Korea Development Institute (KDI) raised its projections about the Korean economic growth rate for the next year from 3.3 percent to 4.1 percent in light of recent improvements in the domestic economy. Next year`s price increase rate is projected to be 2.6 percent, and the account balance is to have a surplus of 4.4 billion dollars.

The KDI made its predictions on December 21 through the `2001 4-4 Quarter Economic Projection` which stated, "Consumer spending, construction, and other domestic factors will increasingly improve. With the fall in facility investments slowing down, the economy will stabilize."

KDI`s projected growth rate is higher than Korea Bank`s 3.9 percent figure and more optimistic than the government`s stated goal of `4 percent growth`.

The KDI stated, "The negative after-effects of the American terrorist incident was not as great as expected and things like dropping value of stocks and foreign conditions are getting better. It is hard to expect an immediate economic rebound, there are signs that we are slowly getting near to the potential growth rate." The KDI added, "If the current economic conditions persist, the growth rate for next year could go over 4.1 percent."

The KDI also urged that state-owned banks and financial organizations such as Korea Investment and Dae Han Investment be quickly privatized. It also advised that the administration revamp the pension regulations in order to resolve the unemployment of twenty and thirty-somethings and to increase the flexibility of the labor.

Joong-Hyun Park sanjuck@donga.com