GUATEMALA CITY -- Despite numerous economic stimulus packages during his tenure in office, South Korean President Roh Moo Hyun must regret his promise to oversee annual economic growth of about 7 percent during his five-year term. As it is, the South Korean economy grew in the first quarter of 2005 at the slowest pace in almost two years with GDP increasing by only 2.7 percent from a year earlier, the slowest rate since the third quarter of 2003. The economy also failed to meet expectations in 2004 with economic growth of only 4.6 percent.
Finance and Economy Minister Han Duck Soo continues to issue upbeat messages about economic growth. But his optimistic remarks have not improved a souring sentiment among South Korean consumers or businesses. According to a report from the Federation of Korean Industries, most of the 720 traditional shops surveyed did not expect their business to improve in the coming months.
There are reasons to worry that the South Korean economy might emulate its Japanese counterpart and enter into a long slump. For example, South Koreans face heavy debt burdens related to the credit-card bubble that peaked in 2003 and a low rate of job creation. And there is the specter of rising consumer prices following the increase in commodity prices by 5.1 percent in April from a year earlier.