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South Korean economy shows rapid recovery—5.9 percent predicted growth

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South Korean economy shows rapid recovery—5.9 percent predicted growth

Olsen 7/12 (Kelly—Associated Press correspondent, “Bank of Korea Raises Growth Forecast to 5.9 Pct,” 7/12/10,
SEOUL, South Korea — South Korea's central bank raised its forecast for the country's economic growth this year to 5.9 percent on solid exports as well as capital and consumer spending amid a stronger global recovery. The Bank of Korea, which had previously expected an expansion of 5.2 percent in 2010, made the revision Monday in a report on the economic outlook for the second half of the year. "Goods exports and facilities investment are forecast to maintain strong growth owing to stronger recovery of the global economy, favorable IT industry and demand for changes in production facilities," the bank said. Consumer spending, meanwhile, will get a boost from higher household purchasing power, it added. The brighter assessment comes after the South Korean government last month raised its forecast to 5.8 percent from 5 percent. More recently, the International Monetary Fund last week said the economy would expand 5.75 percent this year, compared with its previous forecast of 4.5 percent. South Korea's economy, Asia's fourth-largest, has recovered strongly after contracting during the global financial meltdown, boosted by exports, government stimulus and record low interest rates. It managed growth of just 0.2 percent last year.

High – industrial exports

Strong growth in South Korea—robust industrial output, exports, and business investment show

AFP 7/12 (“Central Bank Raises Growth Forecast for S.Korea Economy,” 7/12/10,
SEOUL — South Korea's central bank Monday raised its 2010 economic growth forecast to an eight-year high of 5.9 percent, citing robust industrial output, exports and business investment in the first half. The forecast by the Bank of Korea compares to its 5.2 percent estimate in April. The bank now tips Asia's fourth-largest economy to expand 4.5 percent in the second half compared to a year earlier after growing 7.4 percent year-on-year in the first six months. This year's revised growth forecast, if confirmed, would be the highest since an actual 7.2 percent in 2002. It is also slightly higher than the government's recent projection of 5.8 percent. "The Korean economy is expected to maintain its upward trend into next year ...consumer prices are expected to rise at a faster pace in the second half on demand-pull inflationary pressure," the central bank said in a statement. In the second quarter the economy expanded 1.2 percent quarter-on-quarter but this may fall to 0.7 percent in the third quarter, the bank said. Last week the International Monetary Fund also raised its full-year forecast, to 5.75 percent from an earlier 4.5 percent.

High – fast growth

South Korean economy recovering—fast growth

The Straits Times 7/12 (“S.Korea Ups 2010 Forecasts,” 7/12/10,
SEOUL - SOUTH KOREA'S central bank on Monday upgraded its economic growth and inflation forecasts, just days after it raised the policy interest rate for the first time since the outbreak of the global financial crisis. The Bank of Korea forecast in a statement that Asia's fourth-largest economy would grow 5.9 per cent this year, which would be the fastest in eight years and is up from its previous projection for 5.2 per cent growth. In 2011, however, the economy is expected to grow 4.5 per cent, slower than its April forecast of 4.8 per cent, given a higher base effect. The revisions come after the central bank on Friday lifted the base rate by 25 basis points from a record low of 2.0 per cent, in a move to return policy to pre-crisis mode. The domestic economy probably expanded by 7.4 per cent in the first half of the year and the growth rate was seen slowing to 4.5 per cent in the latter half, the central bank said, in another sign of solid recovery from the global slump. It is set to publish second-quarter economic growth estimates later this month. South Korea's economy has pulled out of the 2007-2008 global crisis ahead of most others and is tipped to post the fastest growth next to Turkey this year among members of the Organisation for Economic Co-operation and Development. The Finance Ministry lifted its economic forecasts on June 24 and said it would gradually shift economic policy back to normal settings.

Low – currency decline

South Korean economy low—won declining

Yoon 7/16 (Frances—reporter for Bloomberg News, “Korean Won Has Weekly Drop as Global Recovery Concerns Mount,” 7/16/10,

July 16 (Bloomberg) -- South Korea’s won fell this week on speculation economic slowdowns in the U.S. and China will hurt exports and curb demand for emerging-market assets. The Kospi share index fell for a second day after U.S. reports showed manufacturing contracted in June by the most in a year and wholesale prices declined more than anticipated. China, the biggest buyer of Korean exports, yesterday reported economic growth moderated to 10.3 percent in the second quarter from 11.9 percent in the previous three months. “Weaker U.S. data has emphasized fears of a slowdown again,” said Seo Jeong Hun, chief economist at Korea Exchange Bank in Seoul. The won declined 0.6 percent this week to 1,203.39 against the dollar in Seoul, according to data compiled by Bloomberg. The currency, which today slipped 0.1 percent, is Asia’s worst performer this year, having fallen 3.3 percent. The Bloomberg-JPMorgan Asian Dollar Index retreated from a three-week high and the MSCI Asia Pacific Index of shares had its biggest loss this month after a Fed report showed U.S. factory output fell 0.4 percent in June. Producer prices slid 0.5 percent after a 0.3 percent decline the month before, the Labor Department said yesterday. Bank of Korea Governor Kim Choong Soo said on July 13 that some Asian countries face difficulties due to their dependence on external trade, which usually brings about volatility in capital markets. Exports are equivalent to more than half the nation’s gross domestic product. South Korea’s government bonds advanced this week. The yield on the 3.75 percent note due June 2013 fell two basis points to 3.92 percent. A basis point is 0.01 percentage point.

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