Institute Puts Growth Rate At Half That Shown in '00

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Institute Puts Growth Rate At Half That Shown in '00

The leading public research institute followed the moves of economic think tanks in lowering the growth forecast for the year. The Korea Development Institute said Thursday that the economy will grow at 4.3 percent this year, less than half of the 8.8 percent growth achieved last year. The adjustment follows the institute's earlier forecast for 2001 of 5.1 percent made late last year.

The institute cited the slowdown in economies worldwide, which will drag export growth down with it. It also said a recovery in domestic demand in earnest appears unlikely before the end of the year.

The adjusted forecast for trade surplus is $13.4 billion, up from the earlier forecast of $9.2 billion. The institute said the price level will rise by 4.2 percent, adjusted from the earlier projection of 3.4 percent. Higher utility rates and the weaker won are cited as the cause.

"Instability in the price level can give rise to external factors that will in turn adversely affect the exchange rate," senior researcher Kim Jun-il said. "The government should keep a close eye to control inflation."

The institute prescribed smaller adjustments in the interest rates rather than making drastic changes to boost the economy. It also advised against increasing budget spending and said the government should make policy measure adjustments after reviewing the effects of the frontloading of budget spending become clear.




by Song Sang-hoon

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