S. Korean president warns of imminent slowdown in real economy

(ATTN: UPDATES with additional remarks, more details)
By Byun Duk-kun
SEOUL, Jan. 8 (Yonhap) -- South Korean President Lee Myung-bak said on Thursday
that troubles in the country's financial markets could soon be felt in the daily
lives of ordinary citizens, and ordered thorough and "preemptive" measures to
insulate the real economy.
"It is highly possible that the real economy could begin to stagnate full-scale
from now on, so we need to take more thorough and preemptive countermeasures,"
the president was quoted as saying by his spokesman, Lee Dong-kwan.
The remarks were made in the first meeting of the Emergency Economy Management
Council, which was set up under a government effort to stabilize the
crisis-stricken economy.
The meeting focused on ways to ensure prompt and increased lending by banks to
households and small and medium-size enterprises (SMEs) as the president believes
the ongoing liquidity crisis not only affects large conglomerates, but also small
businesses and households which could lead to problems in the real economy, the
presidential spokesman told a press briefing.
The meeting was held for nearly 2 hours at the so-called "economic war room" set
up earlier this week inside an underground bunker of the presidential office,
Cheong Wa Dae, according to the spokesman.
To encourage increased and rapid lending by financial institutions, the country
has significantly lowered its key interest rates while also setting up a
50-trillion-won (US$38 billion) fund to help prevent cash-strapped SMEs from
going bankrupt.
However, lenders, apparently feeling pressures of a possible credit crunch
themselves, are not lending as much as the government had hoped.
"These meetings must be as live as they can be and reflect what is felt in the
actual market," President Lee was quoted as saying of the emergency economic
meetings, set to be held at least once a week.
Lee also pointed out the government and policymakers must not become trapped in
what he called the "errors of numbers," according to the spokesman.
"It may appear everything is going well when we are only looking at statistics,
but when looking at what is going on out in the field, things are not going well,
and that is why we must come up with countermeasures that are close to the
(reality in the) field," he said.
bdk@yna.co.kr
(END)