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S. Korean gov't warns of economic recession

(Xinhua)
Updated: 2009-02-05 16:23

SEOUL -- South Korea's economy is in danger of falling into a recession due to a recent downturn in domestic demand and exports amid a global economic slump, the country's Finance Ministry warned on Thursday.

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"Despite easing inflationary pressures, South Korea faces a growing risk of recession as many real economic indicators are worsening, including production, domestic demand and exports," the ministry said in its monthly economy-assessment report, urging the government to take every measure to safeguard jobs and promote the economy.

Many real economic indicators suggested a risk of the first recession in more than a decade for South Korea, Asia's fourth- largest economy.

Exports showed a sharp decline in growth in the country, with January exports dropping 32.8 percent from a year earlier. The report forecast that February exports are to remain at the downward slope.

Consumer goods sales also declined 7 percent in December from a year earlier.

The stagnant job market is worsening already-weak consumer sentiment. 12,000 jobs were shed in December, the first job loss in more than five years.

Industrial output also showed the fastest-pace decline on record in December due to weakened domestic demand and exports, according to the report.

"The government will have to intensify efforts to safeguard jobs and stimulate the real part of the economy by frontloading its fiscal spending, while coming up with measures aimed at helping ease sufferings of smaller companies and low-income people, " the report said.