New York News: South Korea’s new finance minister has warned indicating that the government might initiate the much-anticipated stimulus measures soon.
South Korea had expected that its economy could expand at 3 percent in 2013 from 2.1 percent growth recorded in 2012.
The Korea’s new finance minister will announce stimulus plans as early as next week, suggesting that it will make every effort to bring the economy to growth track. Korea over the past 40 years has an incredible economic growth. South Korea’s GDP was near $1.625 trillion in 2012.
South Korea has become a high-tech industrialized economy.
In the 1960s, GDP per capita was comparable with levels in the poorer countries of Africa and Asia. In 2004, South Korea joined the trillion dollar club of world economies, and currently is among the world’s 20 largest economies. Initially, a system of close government and business ties, including directed credit and import restrictions, made this success possible. The government promoted the import of raw materials and technology at the expense of consumer goods, and encouraged savings and investment over consumption.
The Asian financial crisis of 1997-98 exposed longstanding weaknesses in South Korea’s development model including high debt/equity ratios and massive short-term foreign borrowing. GDP plunged by 6.9% in 1998, and then recovered by 9% in 1999-2000. Korea adopted numerous economic reforms following the crisis, including greater openness to foreign investment and imports. Growth moderated to about 4% annually between 2003 and 2007. With the global economic downturn in late 2008, South Korean GDP growth slowed to 0.3% in 2009.
In the third quarter of 2009, the economy began to recover, in large part due to export growth, low interest rates, and an expansionary fiscal policy. The US-South Korea Free Trade Agreement was ratified by both governments in 2011 and went into effect in March 2012. Throughout 2012 the economy experienced sluggish growth because of market slowdowns in the United States, China, and the Eurozone.