Korea’s Hur Sees GDP Growth Above December Estimate (Update1)
By Sangim Han and Haslinda Amin
April 15 (Bloomberg) -- South Korea’s economic growth will be “better” than the government’s December forecast of 1 percent for the first quarter and 5 percent for 2010, Vice Finance Minister Hur Kyung Wook said.
The government is closely monitoring rising commodity prices, the strengthening currency and lingering uncertainty in global financial markets as “risks” to growth, Hur said in an interview in Seoul today.
South Korea’s credit ratings were raised yesterday to A1 from A2 at Moody’s Investors Service, which cited the nation’s accelerating economic growth and a “relatively small” deficit. The central bank forecast this week that gross domestic product will rise at the fastest pace in four years in 2010, and likely grew 1.6 percent in the first quarter as exports strengthened.
Hur also said that a stronger yuan would be “generally positive” and help correct global trade imbalances. China, whose economy expanded at the fastest pace in almost three years in the first quarter, is South Korea’s biggest trading partner.
The minister said that market speculation on the Chinese currency’s appreciation may also be affecting the won.
“That kind of speculation we suspect might go excessively in one direction,” Hur said. The government is closely watching it, and if it becomes excessive “we will take necessary procedures as appropriate,” he said.
Lehman Brothers
The won strengthened today to the highest level since the collapse of Lehman Brothers Holdings Inc. in September 2008 as overseas investors boosted holdings of the nation’s stocks. The currency appreciated 0.4 percent to 1,107.55 per dollar as of the 3 p.m. close in Seoul, after gaining 1.1 percent yesterday, according to data compiled by Bloomberg. It reached 1,107.60, the strongest level since Sept. 15, 2008.
A stronger currency may make South Korea’s exports, which rose 35.1 percent in March, more expensive and less competitive.
Samsung Electronics Co., Asia’s biggest maker of semiconductors, flat screens and mobile phones, said April 6 that first-quarter profit increased sevenfold after demand for personal computers and televisions drove up prices.
Hyundai Motor Co. and Kia Motors Corp., South Korea’s largest automakers, led a ninth straight gain in monthly car sales in March after new models spurred demand at home and overseas.
China’s economy expanded 11.9 percent last quarter from a year earlier, the statistics bureau said today.
Interest Rates
The Bank of Korea kept the benchmark interest rate at a record-low 2 percent on April 9, even as it forecast this week that the economy will expand by 5.2 percent in 2010.
Hur said today that policy makers needed to be confident that business had recovered from the global slump, as measured by jobs growth, before moving on rates.
“We should assess which impacts would be more serious from raising rates or not raising rates,” said Hur, who has attended central bank policy meetings since January.
South Korea’s unemployment rate declined in March by the most in more than 10 years as government programs to create public-sector jobs gathered pace.
Moody’s yesterday joined Fitch Ratings in awarding South Korea its fifth-highest credit ranking. Standard & Poor’s rating for the nation is its sixth highest.
“The change has been prompted by Korea’s demonstration of an exceptional level of economic resilience to the global crisis, while containing the government’s budget deficit,” Tom Byrne, a senior vice-president at Moody’s, said in a statement.
President Lee Myung Bak today appointed Hur as the nation’s new ambassador to the Organization for Economic Cooperation and Development, replacing Kim Choong Soo, who was appointed governor of the central bank. Yim Jong Yong, presidential secretary for economy and finance, will replace Hur as vice finance minister.
By Sangim Han and Haslinda Amin
April 15 (Bloomberg) -- South Korea’s economic growth will be “better” than the government’s December forecast of 1 percent for the first quarter and 5 percent for 2010, Vice Finance Minister Hur Kyung Wook said.
The government is closely monitoring rising commodity prices, the strengthening currency and lingering uncertainty in global financial markets as “risks” to growth, Hur said in an interview in Seoul today.
South Korea’s credit ratings were raised yesterday to A1 from A2 at Moody’s Investors Service, which cited the nation’s accelerating economic growth and a “relatively small” deficit. The central bank forecast this week that gross domestic product will rise at the fastest pace in four years in 2010, and likely grew 1.6 percent in the first quarter as exports strengthened.
Hur also said that a stronger yuan would be “generally positive” and help correct global trade imbalances. China, whose economy expanded at the fastest pace in almost three years in the first quarter, is South Korea’s biggest trading partner.
The minister said that market speculation on the Chinese currency’s appreciation may also be affecting the won.
“That kind of speculation we suspect might go excessively in one direction,” Hur said. The government is closely watching it, and if it becomes excessive “we will take necessary procedures as appropriate,” he said.
Lehman Brothers
The won strengthened today to the highest level since the collapse of Lehman Brothers Holdings Inc. in September 2008 as overseas investors boosted holdings of the nation’s stocks. The currency appreciated 0.4 percent to 1,107.55 per dollar as of the 3 p.m. close in Seoul, after gaining 1.1 percent yesterday, according to data compiled by Bloomberg. It reached 1,107.60, the strongest level since Sept. 15, 2008.
A stronger currency may make South Korea’s exports, which rose 35.1 percent in March, more expensive and less competitive.
Samsung Electronics Co., Asia’s biggest maker of semiconductors, flat screens and mobile phones, said April 6 that first-quarter profit increased sevenfold after demand for personal computers and televisions drove up prices.
Hyundai Motor Co. and Kia Motors Corp., South Korea’s largest automakers, led a ninth straight gain in monthly car sales in March after new models spurred demand at home and overseas.
China’s economy expanded 11.9 percent last quarter from a year earlier, the statistics bureau said today.
Interest Rates
The Bank of Korea kept the benchmark interest rate at a record-low 2 percent on April 9, even as it forecast this week that the economy will expand by 5.2 percent in 2010.
Hur said today that policy makers needed to be confident that business had recovered from the global slump, as measured by jobs growth, before moving on rates.
“We should assess which impacts would be more serious from raising rates or not raising rates,” said Hur, who has attended central bank policy meetings since January.
South Korea’s unemployment rate declined in March by the most in more than 10 years as government programs to create public-sector jobs gathered pace.
Moody’s yesterday joined Fitch Ratings in awarding South Korea its fifth-highest credit ranking. Standard & Poor’s rating for the nation is its sixth highest.
“The change has been prompted by Korea’s demonstration of an exceptional level of economic resilience to the global crisis, while containing the government’s budget deficit,” Tom Byrne, a senior vice-president at Moody’s, said in a statement.
President Lee Myung Bak today appointed Hur as the nation’s new ambassador to the Organization for Economic Cooperation and Development, replacing Kim Choong Soo, who was appointed governor of the central bank. Yim Jong Yong, presidential secretary for economy and finance, will replace Hur as vice finance minister.