Kim says S. Korean financial crisis over

Kim says S. Korean financial crisis over

SEOUL, South Korea (AP): President Kim Dae-jung said Friday
that South Korea has fully overcome a foreign exchange crisis
that hit in late 1997.

It was the first time that Kim has boasted of a full victory
over the financial crisis. He previously had maintained a
cautious position on the issue.

"As I predicted, we have completely overcome the foreign
exchange crisis in one and a half years," Kim told a meeting with
civic leaders in the southern provincial town of Changwon.

Kim cited increased foreign exchange holdings, low interest
rates and low inflation as evidence for his conclusion.

Kim took office two months after South Korea's economy was
bailed out by the International Monetary Fund in December 1997.
In his inauguration speech, Kim said he will try to get South
Korea out of the crisis in 1 1/2 years.

Massive reforms linked to the IMF's record US$58 billion
bailout forced thousands of financially weak companies to
collapse, resulting in mass layoffs.

But South Korea's economy has since rebounded dramatically and
is expected to grow by more than 9 percent this year, compared
with minus 5.8 percent last year.

Kim said South Korea's foreign exchange reserves, which now
stand at $68 billion, will continue to grow, helped by brisk
exports and expanding current account surplus.

The number of jobless has also dropped from 1.78 million at
the start of this year to 1.07 now, he said.

Kim also predicted that inflation will stabilize at the 1-
percent level.

An IMF official said Friday that the IMF's current 6.5
percent growth forecast for South Korea this year is too low.

Flemming Larsen, the IMF's deputy director of research, said
in a speech to business and government officials that he thought
that South Korea's gross domestic product should grow closer to 9
percent.

"It's quite clear that our projection is too low," Larsen
said.

The IMF made its projections for South Korea's economy two
months ago, citing low interest rates and inflation and President
Kim Dae-jung's strong macroeconomic policies.

Larsen said South Korea could now afford to adopt looser
fiscal and monetary policies to stimulate domestic demand and
spur economic growth, given its strong external surplus.

South Korea's state-run think tank, Korea Development
Institute, projected last month that GDP grew by 11.1 percent in
the third quarter, a sharp rebound from the 7.1 percent
contraction in the same period a year ago.

While private economists see South Korea's economy growing by
around 9 percent in 1999, official IMF forecasts have erred on
the conservative side.