‘Real Economy Could Greatly Worsen From 1Q’

President Lee Myung-bak said yesterday that the real economy could significantly worsen from the first quarter in large part due to slowing exports.

“Certainly, the Korean economy’s dependence on exports is 70 percent. That means we have to admit that our economy could get worse due to the worsening global economy,” he told a conference attended by 230 mayors, county chiefs and district leaders.

“If the economy shows a worse-than-expected performance, it could affect Korea’s economy and make it difficult for the Korean government to realize its goals announced at the end of last year.”

President Lee also urged more interest rate cuts, saying, “The United States and Japan have adopted a zero interest rate policy and interest rates are around two percent in Europe. Given that, Korea has much room to cut its prime rate since it stands at around three percent.”

The Bank of Korea later in the day lowered the rate to 2.5 percent.

“Korea has the lowest debt ratio among member nations of the Organization of Economic Cooperation and Development,” he said. “It means the Korean government has enough room to spend more.”

“All domestic industries should be green industries. It is not about choice. It is the only option we can take.”

He also said the project to revive the nation’s four major rivers will help develop the provinces and boost the economy via productive budget spending.

“Government officials don’t care about efficient energy use. For example, many public buildings have magnificent lobbies. Since no regulations govern public buildings, officials still try to build large and dazzling buildings,” he said.

mhpark@donga.com