By Kim Sung-jin
Staff Reporter


Korean policymakers foresee the two-year economic slump will draw to a close next year as the economy will grow near the potential growth rate of 5 percent and create 350,000-400,000 new jobs.

The Ministry of Finance and Economy (MOFE) Wednesday announced that the government will pursue macroeconomic policy to solidify the ongoing recovery.

The government will focus on restoring vitality in the economy and building a foundation for sustainable growth, deputy finance and economy minister Kim Seok-dong told reporters Wednesday.

He added that the government will seek to narrow the gap between economic indicators and real economic conditions felt by people.

The government Wednesday reported its 2006 economic management plan to President Roh Moo-hyun at Chong Wa Dae.

The projection is higher than the 3.9 percent estimated for this year and also is in sync with the Bank of Korea’s growth forecast for next year.

To strengthen the capital market and securities industry, the government will submit to the National Assembly a bill enabling brokerage houses to offer department-like financial services, bill settlements and remittances. Brokers will be able to deal in a limited range of banking services through Korea Securities Finance Corp. (KSFC).

The bill will allow non-banking financial organizations such as the KSFC to access banking networks. The capital market integration plan is aimed at consolidating local brokerage houses, asset management, and futures firms to nurture internationally-competitive investment banks.

``When the law takes effect and banks and securities firms fix technical hitches, customers will be able to use securities accounts as they use bank accounts,’’ Kim said.

Investors will be able to receive salaries through securities accounts once securities firms begin providing such service. This would ignite all-out competition between banks and securities firms.

The government expects a 5-percent-growth rate to be enough to create 350,000 to 400,000 jobs in 2006, compared with 310,000 projected for 2005.

``Domestic demand recovery will gather momentum and exports will remain strong next year,’’ Kim said.

Consumer prices are predicted to increase by about 3 percent next year from about 2.7 percent this year.

The MOFE predicted that domestic private spending would pickup next year, with growth rate reaching about 4.5 percent on recovery of household income.

Still, the speed of domestic spending recovery will be swayed by interest rate policies as additional key interest rate hikes would increase consumers’ interest burden, affecting domestic consumption, it said.

The current account surplus is forecast to shrink to $15 billion in 2006 from $18 billion estimated for 2005.

Investors will be able to use their securities accounts like bank accounts for financial transactions such as settling of credit card bills and remitting and receiving money as early as latter half of next year.

The government will pursue establishing a legal foundation in the first half of 2006 as part of its moves to dismantle business barriers among banks and non-banking firms, Kim said.

sjkim@koreatimes.co.kr