Kim Dae-jung vows to revive economy

Kim Dae-jung vows to revive economy

SEOUL (Reuters): South Korea's president-elect Kim Dae-jung vowed yesterday to revive the ailing economic tiger in two years with the help of the International Monetary Fund but he also warned of difficult times ahead.

"Many hardships are in store for us in the new year," the 74- year-old president-elect said.

Crowds gathered in downtown Seoul for the bell-ringing ceremony to chime in the new year, but economic fears pervaded as another year of economic uncertainty began.

"Inflation will flare up, unemployment rise and numerous companies collapse," Kim said in his New Year message.

South Korea is expected to see flat to negative economic growth in 1998 with more than a million workers laid off in its first experience of austerity since the oil shock of the early 1980s.

"(The economy) is standing at a crossroads between catastrophe and rebirth," Kim said.

On New Year's Eve, he wrote his solemn thoughts into Chinese characters for public display: "Calm the Country, Salvage the People."

Asia's largest tiger economy was ravaged by major corporate collapses last year that culminated in a crippling financial crisis. The IMF, along with global industrial powers, came to South Korea's rescue in December.

The price for the bail-out package, approaching $60 billion, was a massive restructuring of the economy.

"We must use this opportunity to carry out reforms that have been delayed by internal resistance and barriers," Kim said. "I am convinced of economic revival that will make the IMF control no longer necessary in 1999."

South Koreans have high hopes for Kim's new government to solve their economic problems.

The Korea Economic Daily said yesterday eight out of every 10 South Koreans believed the economy would recover through a successful restructuring.

Kim has already spearheaded many reforms since winning the presidency last month, although his official five-year term does not start until Feb. 25.

With the country facing major defaults on its debts, the IMF and donor countries, impressed by Seoul's reform efforts, have sped up rescue loans and foreign lenders have started to roll over loans to the cash-starved country.

"By any objective measurement, examining what Korea has done has been quite remarkable. They have complied fully with their commitments," said a senior U.S. diplomat in Seoul.

South Korea's once-closed capital markets are now open to foreign investment and the shackles of state guidance of the economy are disappearing fast.

"This country has a unique opportunity to run the country through a de facto government of national unity," the U.S. diplomat said.

Outgoing President Kim Young-sam's disappearing act surprised no one in South Korea amid mounting public anger and criticism of his administration for its poor economic management.

"Kim Young-sam was a total failure as the nation's president," said Shin Myung-soon, political professor at Seoul's Yonsei University.

But stakes are also high for Kim Dae-jung, particularly as he has yet to convince South Korean workers to accept layoffs as a critical part of the economic reform.