Entry #4 20300156 Kim Han-gil

World Bank lowers growth forecast
Lender says subprime crisis will hurt, but region’s fundamentals still strong
April 02, 2008

Korea’s economy is expected to grow 4.6 percent this year and 5 percent in 2009, the same as the average predicted for newly industrialized economies, the World Bank said in its latest report yesterday. The bank lowered the country’s economic outlook from the previous 5.1 percent in November to 4.6 percent. It said Asia is no exception to the likelihood of a significant slowdown in 2008 from falling exports to the U.S., rising volatility in global financial markets and high international commodity prices.Korea is one of the countries that is more exposed to the U.S. subprime-related assets than other East Asian countries, the report said, naming Woori Bank as one of the most affected institutions. Yet, the region’s strong fundamentals, supported by productivity gains, high savings and growing education and skills, are capable of preventing financial turmoil and cyclical slowdown, it said. In a review of East Asian and Pacific economies conducted every six months, the global lending institution said growth in developing East Asia is expected to drop from 10.2 percent in 2007 to 8.6 percent this year and 8.5 percent in 2009. The prediction was for slower economic expansion for all of the region’s nations, including emerging, transition and small economies. Korea’s growth reached 5 percent in 2006 and 4.9 percent last year. Growth by China was expected to hit 9.4 percent this year and 9.2 percent in 2009, while that for Japan was predicted to reach 1.5 percent this year and 2 percent in 2009. The review said East Asia is generally better prepared than ever to deal with uncertainties of the global economy. “The region is becoming more of a growth pole in the world economy, proving to be a force for stability at a time when the industrial economies are slowing,” it said. The report said it was striking how modestly East Asian exports fell over the past six months, as weakened exports to the U.S. were offset by increasing exports to Europe and other East Asian countries. Yonhap