South Korea Says It Will Keep Economic Policies ‘Accommodative’
South Korea’s government will maintain its stimulus packages until an economic recovery strengthens, the Ministry of Strategy and Finance said.
“An exit strategy will be pursued under the international coordination when an economic recovery becomes more solid, even though preparation is needed,” the ministry said in a report to the parliament before its annual audit in Gwacheon. “We will sustain an accommodative macroeconomic policy for the time being.”
The South Korean government allocated extra funds and frontloaded spending this year to cushion the economy from the global recession. The central bank also cut the benchmark interest rate by 3.25 percentage points between October and February and left it unchanged at a record-low 2 percent for an eighth month on Oct. 9.
The ministry said it will take steps to stabilize the currency when the won’s movements are volatile. The South Korean won registered the biggest gain against the U payday loan lenders.S. dollar among 16 major currencies on Oct. 9. The government will also closely monitor short-term external debt trends.
“We will respect as much as possible the movements in the market, which reflect economic fundamentals and market demand and supply,” the ministry said. “We will take steps to stabilize the drastic won movements stemming from herd behavior.”
Gross domestic product expanded 2.6 percent in the second quarter while exports posted the smallest decline in 11 months in September.
The benchmark Kospi stock index has jumped more than 46 percent this year on rising optimism for an economic recovery. The government forecasts the economy will contract 1.5 percent this year before expanding about 4 percent in 2010.
Filed under: economics by Fred