Asia Times: Unemployment down, interest rate hikes ruled out



	November 24, 1999	atimes.com

The Koreas

Unemployment down, interest rate hikes ruled out

SEOUL - The South Korean government on Tuesday ruled out the possibility of raising interest rates next year.

Assistant Finance and Economy Minister Lee Geun-kyong said the government saw no need to raise rates next year after reviewing pressure on total demand, fluctuations in international oil prices and the outlook for wage increases.

He indicated that rates may instead drop because long-term interest rates next year will be around 8-9 percent, compared with the existing corporate bond yield surpassing nine percent.

There have been calls for higher interest rates in the light of potential economic growth of six percent or more next year. But the minister said that such growth was impossible because the nine percent growth rate projected for this year was really 4-5 percent when the technical rebound of about five percent was taken into consideration.

Consumption is forecast to grow nine percent this year, reflecting heightened consumption as a reaction to depressed spending last year, but the increase rate for next year will remain around five percent.

''International oil prices are critical to determine the price level, but the oil price of about $22 per barrel has already been factored into consumer prices and is expected to stabilize after this winter,'' he said.

Another encouraging sign for the South Korean economy is the latest report on unemployment figures.

The unemployment rate dipped to 4.6 percent or 1.02 million persons in October, a drop of 48,000 people, and the lowest since January last year. The seasonally-adjusted unemployment rate also showed a fall of 0.2 percentage points to 5 percent.

Employment increased across the board in all sectors except the construction, private and public service sectors.

(Asia Pulse/Yonhap)

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