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S Korea unveils $11bn stimulus plan
Tax cuts and more government spending aimed at cushioning economy from global recession.
Last Modified: 03 Nov 2008 04:51
The country's export growth has slowed to its lowest level in 13 months [EPA]

South Korea has unveiled an $11bn economic stimulus package the government hopes will help cushion its economy from a looming global recession.

In a statement on Monday the finance ministry in Seoul said it would expand fiscal spending by 11 trillion won ($8.7bn) next year and offer additional tax cuts totalling 3 trillion won - the most aggressive measures in recent years.

The measures - still subject to approval from parliament - were announced hours after the government released new figures showing that the country's export growth in October had slowed to its lowest level in 13 months.

Kang Man-soo, South Korea's finance minister, said the stimulus measures were aimed at lifting the country's economic growth in 2009 by an additional one percentage point to around four per cent.

"If the current situation continues, the economy is expected to grow by around three per cent next year. If the global economy shrinks further, it may be difficult to achieve three per cent growth," he told reporters.

Kang said he also expected the country's current account to swing to a surplus of about $5bn in 2009 after posting its first annual deficit in 11 years of about $10bn this year.

The ministry also said it would sharply raise the size of bond sales to fund intervention in the foreign exchange market and offer a state guarantee on foreign-currency deposits at local financial institutions.

South Korean Share prices fluctuated in volatile trading on Monday, rising by much as four per cent then briefly turning negative ahead of the government announcement, before rising again on the release of the stimulus measures.

Seoul's benchmark Kospi index lost 23 per cent in October.

Source:
Agencies
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