Korea to grow 4.7% in 2010: Economist

Korea's economy will grow 4.7 percent in 2010, driven by robust household consumption and the revival of exports, an editor of U.K. magazine the Economist said yesterday.  

"Korea's economy is blooming nicely again, into a recovery. This is driven largely by policy stimulus and the revival of exports, particularly by the revival of Chinese demand," Charles Goddard told reporters in Seoul.  

"We reinstate the Korean growth this year to hit positive figures of 0.6 percent, and next year to rise to about 4.7 percent," he said. Goddard was in Seoul for a conference opening today which is organized by the Economist Intelligence Unit, the research arm of the Economist group.  

The EIU expects the Bank of Korea to raise its interest rate sometime this quarter or early next year, which is earlier than it had originally expected, he said.  

While the economic outlook is strong, the growth rate for the country will be lower than the pre-crisis level beyond 2011.  

"It's likely that 2011 and beyond is going to return to a slightly lower trend, partly because fiscal stimulus measures will be taken away, and partly because the base effect is no longer there, and also because there is continued weakness, importantly in the global trade environment," said Goddard. 

Korea, the fourth-largest economy in Asia, is rapidly pulling out of the global recession. Its gross domestic product expanded 2.9 percent in the third quarter of this year from a quarter earlier. 

Finance Minister Yoon Jeung-hyun said last month that the economy may post positive growth this year, contrary to his earlier projection of a contraction.  

The EIU said China's rising sophistication is something the nation has to develop strategies on, looking beyond the current crisis. In terms of a mix of exports, Chinese products are gradually moving towards high-tech and away from the low-tech products, it said. 

The EIU will hold a business roundtable today with key Korean policymakers, including Finance Minister Yoon and BOK Governor Lee Seong-tae.