South Korea Says ‘Too Early’ for Optimism on Economic Recovery

By Seyoon Kim

June 4 (Bloomberg) -- South Korea’s government said it’s “too early” to be too optimistic about the economic outlook, as the economy faces a number of uncertainties including the global financial-market unrest.

“The local economy is continuing its recovery trend and the global economic slump is showing signs of easing,” the finance ministry said in a monthly economic outlook report from Gwacheon today. “Still, it’s too early to be optimistic about the economic outlook as there are uncertainties in the global markets, concerns about rising oil and the recovery is weak.”

Reports earlier this week showed South Korea’s exports slumped at the fastest pace in four months in May as demand from the U.S., Japan and China weakened. The decline in exports was the seventh in a row, extending the longest slump since 2002.

At the same time, there are signs that the worst of the slump may be over, both for South Korea as well as its biggest Asian trading partners. Factory production gained for a fourth month in April, manufacturers’ confidence climbed to an eight- month high and consumer confidence rose to the highest in almost two years.

The $929 billion economy avoided a technical recession in the first three months of this year, helped by record-low interest rates and government stimulus. South Korea’s economy grew 0.1 percent in the first quarter, rebounding from a 5.1 percent contraction in the previous three months.

The government said it will maintain an “expansionary macroeconomic policy” including the extra spending. South Korea probably posted a current account surplus of more than $4 billion in May, the ministry said today.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net