Gov’t Raises Growth Target to -1.5 Pct. This Year

The government yesterday said it has raised its forecast for economic growth this year to minus 1.5 percent, up half a percentage point from its previous estimate.

The Strategy and Finance Ministry also said it will maintain its fiscal and monetary policies for the time being amid lingering economic uncertainty in Korea and the world. For the country to prevent side effects stemming from excess liquidity in the market injected in the course of recovery efforts, however, “exit strategies” will be introduced according to the pace of economic recovery.

In a contingency economic review meeting at the presidential office yesterday, the ministry briefed President Lee Myung-bak on the direction of economic policy in this year’s second half.

The number of new hires this year is expected to decline by 100,000 to 150,000 instead of the initial estimate of 200,000 due to temporary employment in the public sector and other job programs. The current account surplus for this year is forecast to reach 25 billion U.S. dollars, up nine billion dollars from the original target.

The government, however, will seek to reduce excess market liquidity by easing fiscal and monetary measures once recovery perks up.

In a related move, public authorities will toughen the requirements to obtain a housing loan through the loan-to-value and debt-to-income ratios if and when the real estate market heats up in this year’s second half.

leon@donga.com ceric@donga.com