South Korea's economy steadily recovering but pace remains

South Korea's economy is recovering steadily, but the pace still remains weak with business sentiment sharply deteriorating, the top economic policymaker said Thursday.

   "We are making a steady recovery, but its speed and strength remains weak," Finance Minister Choi Kyung-hwan said at a meeting with a journalists' group in Seoul.

   "In particular, business sales are declining and profitability is getting worse, a sign that corporate sentiment is sharply shrinking."

   Choi gave a bleak assessment of global economic situations, saying that uncertainty in the world financial market is deepening, caused by different paces of economic recovery in individual countries and their different timing in seeking monetary policies.

   He cited the accelerating yen's descent as a major factor that could hurt the bottom lines of small and medium-sized exporting companies.

   As part of efforts to help them better cope with the currency issue, the government will provide diverse benefits, including tariff exemptions and low-interest rate loans to companies seeking to purchase equipment and facilities by making use of the weak yen, Choi said.

   He reaffirmed that the government will keep its macroeconomic policy in an "expansionary" fashion until the economy shows a "marked" recovery. In the longer term, however, "fundamental"

structural reforms are needed to improve the overall economic health, he noted.

   If domestic demand picks up from such stimulus efforts, including more than 41 trillion won worth of fiscal spending plans, the economy will be able to grow in the 1 percent range starting in the final quarter of this year and return to the 4 percent rate next year, said Choi.

   Touching on domestic issues, he said that the government is not considering raising taxes "at this point," shrugging off claims that more revenue is needed to push for expanded welfare spending being pushed by President Park Geun-hye.

   "We are not considering raising tax rates, whether they are direct taxes or indirect taxes. What is more important is to come up with ways to achieve economic recovery," he said. (Yonhap)