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Wednesday, 26 June, 2002, 06:57 GMT 07:57 UK
South Korea boom accelerates
Thousands of South Korean soccer fans gather in front of Seoul City Hall
South Korea's economy is likely to grow more than 6% this year, thanks to a sustained economic upturn buoyed by its experience of hosting the World Cup.

The Finance and Economy Ministry in the capital, Seoul, said it was boosting its estimate of likely economic expansion from the 5% it had previously expected.

"The upturn will continue through the second half (of the year)," the ministry predicted, promising to keep economic policy broadly unmoved.

Strong growth in exports and investment is at the root of the surge, it said.

On the horizon

South Korea is in the midst of a surge in confidence, thanks to its entirely unexpected survival as far as the semi-finals of football's World Cup.

Koreans have seen their team's progress as something of a symbol of the country's recovery from the depths of recession, triggered by the 1997 Asian currency crisis.

Despite a bundle of high-profile bankruptcies - some, like chipmaker Hynix, still being worked out - the economy seems to be back on its feet.

But the ministry warned that the picture is not unclouded.

Volatility

Among the risks threatening the South Korean economy are a strengthening currency - up 8.5% in the year so far - and a backsliding in the US recovery.

The computer chip industry's volatility caused by over-supply is also a worry, the ministry said, while labour issues remain a perennial issue for Korea.

Still, the new prediction does bring government thinking in line with that of the Bank of Korea, which ses growth of 6-7%.

It is expected not to move interest rates, which currently stand at 4.25%, in its board's regular meeting in the first week of July.

See also:

25 Jun 02 | Business
19 Jun 02 | Asia-Pacific
23 May 02 | Business
29 Apr 02 | Business
08 Mar 02 | Country profiles
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