MEXICO CITY (Reuters) - South Korea will not hit its 2012 GDP target of 3.3 percent growth after three slow quarters, but expects recent stimulus measures to drive a modest rebound in the fourth quarter, Finance Minister Bahk Jae-wan said on Sunday.
“We expect a modest rebound in the fourth quarter, but the rebound will not be V-shaped,” Bakh told Reuters in an interview on the sidelines of meeting of G20 ministers and central bankers in the Mexican capital.
“It’s modest, so some are saying it is going to be Nike-shaped,” he said, referring to the slightly curved logo of the global sportswear maker.
Bahk said “3.3 percent is not achievable” in a 2012 global climate soured by the ongoing euro zone crisis, slow growth in the United States and a cooling Chinese economy. But he added that he thought South Korea could beat economists’ consensus figure of growth in the low-to-middle 2 percent range, thanks to a set of stimulus packages Seoul unveiled earlier this year.
The government in September unveiled a package of tax breaks and provincial government budget measures worth about $5.2 billion (3.2 billion pounds). These followed a $7 billion package in late June for a total value of about one percent of gross domestic product.
Bahk indicated Seoul is not ready to revise downward its target of 4 percent growth in 2013, but he noted the performance of Asia’s fourth biggest economy next year would depend on a range of domestic and external variables.
“We think that very close to four percent range may be possible, although that may depend on the result of the coming presidential election in Korea in December,” he said.
“A new administration’s stance on economic growth will have a lot of influence,” said Bahk. President Lee Myung-bak is in the final months of a five-year term and the country’s laws prohibit a second term.
External factors weighing on the Korean economy next year include U.S. elections on Tuesday and looming difficult negotiations over America’s fiscal deficit, the size of any stimulus implemented by China’s incoming new leadership and the ongoing euro crisis, he said.
The appreciation of the South Korean won, which has gained more than 5 percent so far this year against the U.S. dollar and added to the troubles of exporters, “is faster than our expectation,” said Bahk.
“What worries us is not the level of the currency, but the volatility,” he said. “In that sense we are keeping a close eye on what is going on in the Korean market.”
Reporting By Paul Eckert; Editing by Chizu Nomiyama