IMF “Growth Rate of Korean Economy This Year to Be 4 Percent”

The International Monetary Fund (IMF) raised its projected growth rate for the Korean economy this year to 4 percent.

The executive board of the IMF released an annual report on the Korean economy as in U.S. Washington on the 13th.

In the report, it said that the Korean economy has rapidly recovered in spite of the recession of the world economy, and raised the growth projection this year to 4 percent, which is 0.8 percent higher than the figure of 3.2 percent of last December. And it forecasted the rising ratio of consumer prices to be 2.2 percent, and the current account surplus to be 6.2 billion dollars.

IMF advised, "Uncertainties about the Korean economy in the short term still exist, but since there are less worries about inflation and the government finance is strong, the government should take a supportive macro-economic policy."

The IMF also added, "The direct restrictions on the financial groups since the foreign exchange crisis should be abolished. But abolishing the restriction should be done within the scope of the full market mechanism which secures sound corporate governance like the improvement of the audit system and class action lawsuit."

IMF emphasized, "Nonviable firms should be liquidated and governmental banks should merge companies that cannot manage their losses."

In relation to restructuring of finance, it said, "We welcome the government`s plan to sell its equity for banks."

The IMF advised the government to limit intervention in the foreign exchange market to exceptional cases, and not to fix the exchange rate of the won to a single currency.

sanjuck@donga.com