IMF: South Korean economy to decline 4% in 2009

Special Report:Global Financial Crisis

SEOUL, Feb. 3 (Chinese media) -- The International Monetary Fund (IMF) predicted Tuesday the South Korean economy will decline 4 percent for 2009 due to decrease in domestic demand and exports amid the global economic recession.

On January 24, the IMF made a projection of a 2 percent growth in South Korea's economy in 2009. However, after it adjusted its forecast on the global economy growth from 2.2 percent to 0.5 percent last week, the IMF sharply reduced their predictions for South Korea to negative growth.

The IMF, however, presented optimistic outlooks for long-term economy in South Korea at a report on Tuesday. According to the IMF, South Korea, the Asia's 4th largest economy, has a potential to accelerate its recovery from the second half and is expected to grow 4.2 percent in 2010. It expects that 2010 would be the largest turnaround among world economies.

The IMF said that such a turning point will be made possible, with the nation's strong fundamentals, the government's comprehensive and forward-looking approach to the global turmoil and other economic-stimulus measures.

A group of think tanks and investment banks also lowered their forecasts for South Korea's economy.

Switzerland-based USB forecasted that the economy will mark minus growth of 3 percent, Moody's Investors Service of 2 percent, and Fitch Ratings of 2.4. Standard Poor's also decreased its earlier predictions for South Korea to zero percent.

Although the current goal of the government is a 3 percent growth, the Bank of Korea, the nation's central bank, lowered its outlooks from 2.5 percent to 2 percent.