G20 host SKorea says will maintain stimulus for months

SEOUL (AFP) - South Korea will not change policies designed to stimulate the economy until at least November when it hosts a G20 summit, Finance Minister Yoon Jeung-Hyun said.
Yoon, in an interview with Mondays Dong-A Ilbo newspaper, said a decision on an exit strategy would be made that month. We, as host of the G20 summit responsible for the international coordination of exit strategies, will maintain current (loose fiscal) policies at least until then. The ministers office confirmed the remarks.
South Korea hosts leaders of the Group of 20 advanced and developing nations in Seoul on November 11-12. It will be the second G20 summit this year after one in Toronto on June 26-27. In the face of the global downturn, Asias fourth largest economy adopted aggressive government stimulus spending.
In addition, the independent Bank of Korea slashed interest rates between October 2008 and February 2009. They have remained at a record low 2.0 percent since then.
South Korea recovered from the downturn faster than expected, partly thanks to the stimulus measures, but recent data shows the momentum may slow.
The economy grew 0.2 percent quarter-on-quarter in the three months to December 2009, down from a 3.2 percent gain in the previous quarter.
Yoon said last week the government would be cautious in unwinding its stimulus policies, citing a lacklustre employment situation at home and recent sovereign debt worries in Dubai and the eurozone as risks.
He told Dong-A it would try to cut spending and reduce liquidity in the markets. But we cannot rush to such a full-scale exit strategy as raising interest rates.
The minister said he expected the budget deficit to fall from 5.0 percent of gross domestic product last year to 2.7 percent this year.