Rosy Economic Outlook

Major Agenda of ADB Annual Meeting

The 39th annual Meeting of the Board of Governors of the Asian Development Bank (ADB) will take place at Hyderabad, India, on May 5, with representatives of the 64 member countries, ADB staff, and about 3000 people from the financial, academic, and journalistic communities in the Asian region attending.
Major topics at the annual meeting will include the management of the ADB in 2005, finance, and business results. They will also include the operation plan for this year. The target for the development of the new millennium, a management plan centered on results, the strategy for the development of e-Asia, ADB's new accountability mechanism, regional integration project, micro-finance for support to the low-income bracket, the change of ADF currency, new financial support, among others, which are expected to draw a lot of attention from the participants at the meeting.
From May 3-5, a seminar will be held to discuss major issues in the region: the integration of the Asian economy and cooperation; global imbalance, the integration of Asian financial markets, the integration of Asia through electronic governments, the realization of knowledge-based society in the 21st century, and the building partnership between civilian and public entities in investment and in social infrastructure.
The Finance Ministers Meeting of Korea, China and Japan
The meeting is scheduled to take place Thursday, May 4 at the Convention Center. Major issues to be dealt with at the meeting would include the need for stronger cooperation in economic policies and the economic trends for three countries; the progress in ASEAN+3 financial cooperation projects including CMI and ABMI; and the adoption of a joint message by the finance ministers of the three countries at the end of the meeting.
The Joint Message will be announced to the media and will cover major topics such as the joint effort to deal with major economic issues in the world economy and spur the three countries'cooperation in the area of ASEAN+3.
The Meeting of ASEAN+3 Finance Ministers
South Korea and Cambodia prepared for the meeting jointly as co-chair countries for cooperation process of the 2006 ASEAN+3 Finance Ministers Meeting.
The meeting will take place on Thursday, May 4 at the Taj Residency Hotel and take up such topics as the economic trends in the region, the progress of the financial cooperation projects, and the adoption of a Joint Ministerial Statement. A joint media conference will take place on such matters as CM.
The Ministry of Finance and Economy projects that per capita income would reach $20,000 in 2008 when the term of the Participatory Government of President Roh Moo-hyun is over and the economic growth would be able to sustain a 4 percent annual growth rate until 2010.
Presuming that the economy would continue to sustain its potential growth rate, gross domestic product (GDP) would amount to $1 trillion in 2008 and would hit the level of $2 trillion in 2016 with per capita income reaching $50,000 in 2020, Deputy Prime Minister and Finance and Economy Minister Han Duck-soo said.
If the projection holds true, Korea would rank the 9th in the world in terms of the economic scale in 2020, DPM Han said, quoting the ministry's report summarizing the economic achievements in the first three years of the participatory government.
When the participatory government took over in 2003, the economic conditions were mired in all sorts of difficulties with uncertainties at home and abroad rising. Externally, North Korean nuclear programs and the U.S. invasion of Iraq developed, while at home, domestic economy was running sluggish due to a heavy household debts and financial problems arising from increasing number of credit defaulters and credit card debts, Han recalled.
Even after the new government took over, the rise in the number of credit defaulters continued and the need for restructuring of SMEs and small business operators continued to rise.
Deputy Prime Minister Han Duck-soo, who also is the finance and economy minister, said the participatory government has never resorted to policies to perk up the economy, which might be hurtful to the economy and but, instead, focused on resolving restructuring problems at their roots in terms of mid-to-long term perspectives. The government also has tried to make the economic structure strong during the economic recess. As a result, the economy has been showing signs of recovery and getting back on track; private spending and domestic economy have recovered to the extent that the economic growth rate during the last quarter of 2005 amounted to 5.2 percent, helped by steady growth in exports. The number of credit defaulters, which had been undermining the economic growth when the new government came in, has improved from April, 2004, along with the return of normalcy in household debt.
The foreign exchange reserves totaled $216.3 billion as of the end of January, the fourth largest after Japan, China and Taiwan.
Following the improvement in the economy, Korea has been getting higher credit ratings from leading credit ratings firms in the world including Standard and Poor's, which raised the rating from A- to A+ in July, last year. Fitch raised its credit ratings on Korea to A+ from A in October.
The real estate market has found stability after the August 31 measure was enforced to cool down the market, although there were spots where land prices kept rising even after the measure was put into effect. The market has become more transparent, and disciplined following the enforcement of the measure.
In the financial sector, corporations and financial organizations saw their profit and financial structure improve. The stock market index jumped to 1,300 points from 592 points when the government took over in 2003.
The level and the number of receivers of government support in living expenses expanded with the expansion of social safety net and the facilities for the disabled. Following the recovery of domestic economy, income gap has been showing signs of improvement.
Despite these policy results, indications are that some tasks for solutions still remain. Physical symptoms for economic recovery have yet to be felt by SMEs, and people in general due to sluggish domestic economy and the widened gap between the rich and poor. The income distribution has been improving, but still they remain far apart, requiring more positive effort. Trade terms have worsened falling short of improving GNI.
In particular, with the social safety net still in its beginning stage, there still are areas where the welfare programs have yet to reach.
DPM Han has made clear that the ministry will stick with policies to keep the economy on the improvement track in the remaining two years of the current administration, focusing on policies that will have successful results. nw

Deputy Prime Minister & Minister of Finance and Economy
Han Duck-soo.