S. Korea faces growing recession risk: ministry

SEOUL, Jan. 8 (Yonhap) -- South Korea's economy is facing an increasing risk of
sliding into recession as exports slump and domestic demand weakens in the face
of a marked worldwide growth contraction, a government report showed Thursday.
"Despite easing inflationary pressures, South Korea faces increased risk of
recession as many real economic indicators are worsening, including slumping
production, anemic domestic demand and exports," the Ministry of Strategy and
Finance said in its monthly report assessing current economic trends.
The bleak estimate provides a snapshot of South Korea's economy, which has been
hard hit by fast-developing global downturn in the wake of financial turbulence
sparked in September.
It is also is in line with an assessment unveiled by the state-run think tank
Korea Development Institute a day earlier, which warned, "The possibility of a
recession is running high."
The report showed that exports and domestic demand are slowing at a
faster-than-expected pace, weighing on production activities in the local
manufacturing sector.
Exports, the backbone of the nation's economy, saw a sharp decline in growth.
According to the report, December exports plunged 17.4 percent from a year
earlier with the contraction likely to accelerate in January amid intensifying
global recession woes.
Consumption in the private sector inched up 1.1 percent in the third quarter of
the year from the same period a year earlier, also decelerating from a 2.3
percent on-year expansion three months earlier.
The stagnant job market is denting already-slumping consumer spending. The number
of newly-created jobs in November stood at 78,000 in November compared with a
year earlier, marking the lowest figure in five years. It is also far below the
government's annual target of generating 200,000.
With weakening domestic demand and exports, industrial production plunged to an
all-time low in November, with output contracting 14.1 percent from a year
earlier.
"The government has to do utmost in creating jobs and stimulate the real part of
its economy, helping smaller companies and low-income people cope with toughening
living and business conditions," the report said.
kokobj@yna.co.kr
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