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S. Korean economy on sound growth track: U.S. economist

All Headlines 17:00 June 02, 2014

By Lee Minji

SEOUL, June 2 (Yonhap) -- A U.S. economist on Monday said the growth rate of Asia's fourth-largest economy is "pretty good" compared with other countries, ruling out the need for additional government stimulus measures.

"Korea is not growing at the rate it had enjoyed for a long period during the process it was converging into rich countries. But still, the recent growth of around 3-4 percent is pretty good in a world perspective," Professor Robert Barro of Harvard University told reporters on the sidelines of an annual conference hosted by the Bank of Korea.

"I don't see this as a rationale for government intervention further into the macroeconomy in the form of monetary stimulus or fiscal stimulus," he added.

The South Korean economy expanded 3 percent in 2013, with this year's growth forecast by the central bank standing at 4 percent.

S. Korean economy on sound growth track: U.S. economist - 2

Regarding the country's current account surplus, which stayed in the black for the 26th straight month in April, Barro said the trend seems to be in line with South Korea's economic track record.

"Exports have traditionally been an engine of economic growth for South Korea... (The recent data) seems to be consistent with that perspective, with strong export growth exceeding the growth of imports and leading to further current account surplus."

"I don't see this as a recessionary event," he said, a remark that came amid concerns that South Korea is going through a recession-type surplus.

The U.S. economist added that while the Sewol ferry accident may temporarily affect the local economy, it does not call for government intervention. The ferry sank off the country's southwest on April 16, killing more than 300 people. The South Korean government is worried that the tragedy is seriously discouraging domestic spending, hurting the economy.

On household debt, the professor said that it may become a problem if it is mostly short-term debt and not set to be amortized rapidly.

He added that South Korea should not follow the footsteps of Japan, citing the neighboring country's high public debt stemming from major public infrastructure projects.


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