S. Korea`s economy to shrink 1 pct in 2009: Goldman Sachs

SEOUL, Jan. 13 (Yonhap) -- The South Korean economy will likely contract 1
percent this year due to a plunge in exports amid a global business downturn,
Goldman Sachs forecast Tuesday.
Goldman Sachs joined other foreign investment banks including Merrill Lynch and
UBS which forecast that Asia's fourth-largest economy will shrink for first time
in more a decade this year. Its earlier prediction was a 1.8 percent expansion.
The gloomy outlook is attributed to sharply falling exports and few signs that
the market conditions will turn around in the foreseeable future amid a global
economic recession.
Gripped by an overall decline in overseas demand, South Korea's exports plunged
17.4 percent from a year earlier, according to government data. The finance
ministry forecast that the contraction will likely accelerate in January.
President Lee Myung-bak said last month that the economy could shrink in the
first half of 2009 amid slowing exports, higher unemployment and anemic
consumption. In a monthly economic report on Thursday, the finance ministry
echoed the view that South Korea faces an "increasing risk of recession."
In mid-December, the government said it would strive to achieve 3 percent growth
this year but many experts say that goal is too optimistic as recessions in major
advanced nations including the U.S. could hit South Korea's export-oriented
economy.
kokobj@yna.co.kr
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