By Lee Hyo-sik
Staff Reporter


Kenneth Kang, representative of the International Monetary Fund (IMF) office in South Korea, Wednesday defended the international organization’s move to slash Korea’s economic growth forecast for this year from 5.5 percent to 4.6 percent.

Kang, in a speech at Yonsei University, said that to achieve a sustainable and healthy economic growth, the Korean government should strive to adopt and implement a package of sound and workable economic policies rather than be obsessed with comparing growth forecasts estimated by different institutions.

``A majority of international economic bodies, including the Asian Development Bank, lowered South Korea’s growth outlook due mainly to skyrocketing international crude oil prices and prolonged sluggishness in domestic consumption,’’ he stressed.

He also said that if South Korea wants to join the ranks of advanced countries in the future, the government should increase spending to build a sound social safety net amid a rapidly aging population, make the labor market more flexible, and improve corporate governance.

Meanwhile, in an apparent attempt to mend uneasy relations with Seoul since the IMF officially lowered South Korea’s growth rate last month, Kang added the IMF’s growth forecast for the country is still higher than those of other major economies and at a similar level with the Korean government’s own economic growth forecast.

Following the downgraded growth forecast by the IMF, the Ministry of Finance and Economy (MOFE) expressed its displeasure by saying that the international institution was too pessimistic about the state of local consumption and facility investments, negatively affecting the country’s international credibility.

Deputy Prime Minister and Finance-Economy Minister Lee Hun-jai even publicly stated he could not figure out on what ground the IMF decided to cut the growth forecast for South Korea, adding that the local economy will definitely grow higher than the IMF’s prediction for this year.

``Even considering the weakness in the local economy, the growth estimate released by the IMF is overly pessimistic since, following a 5.4 percent growth in the first half of the year, economic growth should drop to the upper 3 percent level in the second-half of the year, which is very unlikely, if a 4.6 percent growth is to be realized,’’ the MOFE officials said.

leehs@koreatimes.co.kr