OECD - S.Korea to grow fastest among members in 2010

PARIS, June 24 - South Korea's economy will expand in 2010 at the fastest pace among OECD members after suffering a contraction in 2009, the Organisation for Economic Co-operation and Development (OECD) forecast on Wednesday.

Asia's fourth-largest economy will grow 3.5 percent in 2010 after shrinking 2.2 percent this year, as a weak won <KRW=> helps exporters expand their share of global markets, the organisation said in its economic outlook report.

South Korea's projected 2010 growth will be way above 0.7 percent projected for the OECD's 30 member countries as a whole and would be the fastest among them, the report showed.

It forecast that consumer inflation would slow to an average rate of 2.0 percent in 2010 from 2.5 percent this year, but South Korea's long-term interest rates will have hit bottom by the end of this month.

The organisation said still uncertain world economic prospects and heavily indebted South Korean households were the main risks to the economy.

It also called on the government to scale back spending as the economy strengthens, to bring the budget back into balance, and to pursue tax reform and corporate restructuring to ensure sustained growth over the medium term.

The OECD's latest forecasts on South Korea (percentage change over a year earlier unless stated):

2008 2009 2010 Gross domestic product 2.2 -2.2 3.5 GDP for all OECD members 0.8 -4.1 0.7 Consumer price index 4.7 2.5 2.0 Unemployment rate (percent) 3.2 3.9 3.9 Current account ($ billions) -6.4 26.2 15.0