S.Korea job data, growth f'casts fuel economic fears
Reuters - 39 minutes ago
By Cheon Jong-woo and Seo Eun-kyung
SEOUL, Nov 12 - Job growth in South Korea dwindled to its slowest in 3-½ years in October, data showed Wednesday, as the top state-run research agency warned overall growth could hit a 6-year low in 2009, adding to worries about a sharp economic slowdown.
Data from the statistics agency showed that the country's employers added only about 97,000 more jobs compared with the same month a year ago, the smallest increase since February 2005 when jobs grew by just 80,000.
"Many companies, including big business groups, are reluctant to hire new workers when people fear a severe global economic downturn," said Goh Yoo-sun, an economist at Daewoo Securities.
The increasingly grim indicators backed views for more central bank interest rate cuts and government spending at a time when domestic demand is already turning sluggish and a global financial crisis is pressuring exports, economists said.
"We get fresh evidence showing the economy is slowing rapidly every day, with difficulties at home and abroad. That will prompt the government and the Bank of Korea to take more specific actions," said Kim Jae-eun, an economist at Hana Daetoo Securities.
The central bank has already cut interest rates by a total of 1.25 percentage points in the past month.
Reflecting the expectations for further cuts and economic jitters, the won currency <KRW=> fell 2.2 percent against the dollar to post its weakest close in two weeks and December treasury bond futures <KTBc1> rose 13 ticks.
Seoul shares <.KS11> ended down 0.43 percent, erasing much of their initial losses of up to 2.8 percent, but analysts said the rebound was only technical.
NOT YET BOTTOM
The state-run Korea Development Institute said that the country's economy was seen growing 3.3 percent in 2009, the slowest growth since 3.1 percent in 2003, and compared with a 5.0 percent rise in 2007.
The KDI at the same time cut its 2008 growth forecast to 4.2 percent from a previous forecast of 4.8 percent, saying the economy was slowing rapidly.
"It is difficult to say the economy has hit a bottom, although some say it has. A bottom means that the economy will rebound, but the economy is more likely to fall further," Hyun Jung-taik, the president of the KDI, told reporters.
Growth in South Korean goods exports on a current account basis is expected to sharply shrink to 3.2 percent next year, compared with a forecast of 20.4 percent rise in 2008, the agency said.
The forecast came after a slew of negative corporate news from the United States and signs of weakening in China's economy. China and the U.S. are South Korea's top two export markets.
But the current account in 2009 is seen swinging to a surplus of $8.6 billion from an expected deficit of $8.2 billion this year as imports are likely to grow a mere 0.1 percent, it said.
The KDI said capital investment was seen increasing 1.9 percent in 2009, slowing from this year's forecast of 2.1 percent growth.
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