Economic experts are gloomy, says FKI poll

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Economic experts are gloomy, says FKI poll

The Korean economy may fall into a severe recession and face long periods of underperformance in the future, a poll showed yesterday.

According to the poll of 43 economic experts by the Federation of Korean Industries, the nation’s biggest business lobby, 32 experts, or 74.4 percent, said there is a high chance that Asia’s fourth-largest economy may fall into an L-shaped slump as exports and domestic demand remain sluggish.

An L-shaped slump occurs when an economy suffers a slump and fails to return to its above-par growth trend for many years.

The surveyed experts said the euro zone crisis will not be resolved in the foreseeable future, which will hurt the global economy and reduce demand for Korean products.

Domestic demand is also likely to remain in the doldrums as highly-indebted households and companies reduce spending in the face of growing economic uncertainties, they said.

Most of the respondents also said the Korean economy will not attain its yearly growth target of 3 percent for the year mainly due to the euro zone crisis and a slowdown in major economies such as China.

Last month, the Bank of Korea cut its growth estimate to 3 percent from 3.5 percent, and the Finance Ministry also adjusted its growth target to 3.3 percent from 3.7 percent.

The Korean economy grew 0.4 percent in the April-June period, slowing from a 0.9 percent on-quarter expansion tallied in the first quarter. It marked the slowest growth since a 0.3 percent expansion in the fourth quarter of last year.

The economy rose 2.4 percent last quarter from a year earlier, the weakest growth in nearly three years, according to the central bank.Yonhap

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