Korea predicts 5% growth this year

South Korea will share the hosting of the 2002 World Cup with Japan

SEOUL, Korea -- South Korea's gross domestic product is expected to grow about 5 percent in 2001, stronger than forecast by outside bodies, Finance Minister Jin Nyum said on Friday.

"The economy will grow about five percent this year, but we will review economic indicators again to decide any change by the end of June," Jin told a seminar.

This outlook is more optimistic than recent forecasts by the International Monetary Fund and the Organization for Economic Cooperation and Development.

Korea's central bank has said the economy grew a provisional 8.8 percent last year.

It has forecast 5.3 percent growth this year, but has not released a forecast for 2002, when Korea could expect to get a boost from co-hosting the football World Cup with Japan.

No need for artificial stimulus

Jin, who is also deputy prime minister, said an economic recovery was expected in the second half of this year and he did not think "artificial" measures to boost the economy were needed.

"Without any artificial economic boosting measures, the GDP is expected to grow more than four percent," he said.

The OECD on Thursday forecast South Korea's economic growth to slow to 4.2 percent in 2001, with a U.S.-led rebound possible in the second half as long as corporate reforms stay on track.

It also forecast South Korea's economy would grow 5.5 percent in 2002.

IMF cut forecast to 3.5% last month

The IMF last month lowered its forecast for South Korea's 2001 economic growth to 3.5 percent from a previous forecast of 6.5 percent.

A recent recovery in business and consumer sentiment has suggested a downturn in growth would be short, though potential difficulties in corporate restructuring remain a major risk, the Paris-based OECD said in its semi-annual Economic Outlook.

A Reuters survey of 10 economists in March forecast GDP growth at 4.2 percent in 2001 and 4.0 percent in 2002.

Reuters contributed to this report.

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