Economic Growth Rate Only 2.7 Pct

Gov't still maintains 5 pct growth rate for this year

Economic growth in the first quarter fell to the 2 percent level, clouding the prospect for a 5 percent growth for this year.
The U.S. economy, the foreign exchange rate and oil prices external economic conditions have not been optimistic with facility investment below expectations, undermining economic growth.
An analysis showed that consumption has been recovering, enough to sustain economic growth and prevent it from sliding further, if it could get help from the export sector.
Shin Sok-ha, researcher with the Korea Development Institute, a government think tank, warned that the economy would be hard pressed to achieve even 4 percent growth if the economies of the world including those of the United States and China slump more than expected.
Samsung Economic Research Institute (SERI), which projects a 3.7 percent growth for the economy this year, the lowest among economy research institutes, said the outlook for this year is dim because of sagging exports, although consumption has been rebounding.
Whan In-sung, senior research staff with SERI, said falling exports together with not enough growth in facility investment would not be of help for 4 percent growth.
But the government still maintains that a 5-percent growth would be achievable.
The Bank of Korea, too, projects that a 4-percent growth would be possible since the sluggish first-quarter growth has been partly caused by increases in cigarette prices, which reduced cigarette sales, with smokers stocking up their cigarettes in December before cigarette prices were increased in this year.
The government is counting on a rebound in exports in the second half and its investments in government projects through the supplementary budget to be drawn up in the second half to revive the economy.
The World Bank said, in a recent report, that policy focus should be on economic growth rather than social welfare to help eradicate poverty around the world. The report has been drawing a keen attention because the government has been concentrating on distribution policies including welfare, rather than on large government projects such as those in the social overhead capital sector.
An economist commented that the government has been too optimistic on the recovery of the economy this year and has not done enough to stimulate the domestic economy including the revival of the construction sector. The government also failed to spur facility investment by business firms with the number of jobs created falling well below the 400,000 goal.
The construction of free economic zones and the opening of the service market have also been sluggish not able to make progress as planned.
Park Byung-won, assistant Finance and Economy Minister, said the government will do all it can muster to achieve 5 percent growth this year. The government will see to it that large government and civilian projects are carried out on time including the construction of a tourism-leisure town on Southwest coastal region in addition to taking measures so that foreign investors can build high-tech plants in the Capital area.
The Financial Times reported that the operation evaluation department of the World Bank criticized that its president James Wolfensohn, who is soon to resign, focused on providing funds on education and medical sector in its annual report.
As the report came out just two weeks before Paul Wolfowitz, the incoming World Bank president, takes office, the possibility is high that the new president might try to steer the World Bank to support the recovery of the world economic growth.
An OECD official said the bank's welfare projects fell short of expectations by poor people, adding that spending money alone to relieve poverty can't be enough.
The report also expressed doubts on the Millennium Development Goal that the bank has been pushing since 2001, calling on the bank to put its efforts on the construction of infrastructure, city and farm regions. nw

Deputy Prime Minister Han Duck-soo.