Finance chief: Korean economy to begin recovery in 2Q

Strategy and Finance Minister Park Jae-wan said Saturday that the Korean economy will begin recovering from the second quarter this year.

“I expect the Korean economy will hit bottom in the first quarter this year and go on the path of recovery in the second quarter,” he told reporters at the Group of 20 meeting of finance ministers and central bank governors in Mexico City. "If talks on solutions for the European fiscal crisis make progress and the Korea-U.S. free trade agreement takes effect, this will create momentum for growth along with the policy to execute the government budget early.”

Park warned of dangers posed by inflation stemming from factors such as rising oil prices, however, saying, “Oil prices have a wide range of influence on the Korean economy and fighting inflationary pressure is one of the biggest goals of the government.”

“Inflationary factors include not only international oil prices but also quantitative easing policies by major economies such as the U.S., Europe and Japan. With liquidity growing abundant, external pressure on inflation exists.”

On purchases of Korean government bonds by foreign central banks, Park said, “Dialogue with central banks in advanced economies to resolve instability in the Korean bond market will be completed in the first quarter of this year,” adding, “We will pursue a similar agreement with central banks in emerging economies.”

sanjuck@donga.com