Republic of Korea and the IMF
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"It is a great pleasure to return to Seoul for my second visit as Managing Director of the International Monetary Fund and to see for myself the tremendous advances in the Korean economy since I was here four years ago.
"Today, I had the honor of meeting President Roh Moo-Hyun, who shared with me his vision for a peaceful and prosperous Korea. I have also had fruitful discussions with Deputy Prime Minister Lee Hun-Jai, Bank of Korea Governor Park Seung, and business leaders. Tomorrow, I will participate in the important conference: "A New Vision and Strategy Under Changing Leadership in Northeast Asia."
"The Korean economy is now improving, led by strong export performance. This recovery is expected to strengthen over the coming year as the revival in the global economy becomes increasingly broad based. In my discussions with Korea's leaders, we agreed, however, that last year's slowdown had revealed remaining structural weaknesses in the economy that need to be tackled to make growth more balanced and sustainable.
"We agreed that in order to strengthen domestic demand three areas require particular attention:
· Speeding up the development of a sound financial sector that has a strong culture of credit risk assessment, including by forcefully addressing the credit delinquency problem;
· Further improving corporate governance, including by providing better information to investors, to make sure Korea continues to be an attractive place to invest; and
· Increasing labor market flexibility so that participation in globalization translates into strong job creation in Korea, and at the same time strengthening the social safety net for the most vulnerable.
"We also agreed that to help the recovery in the near term, monetary and fiscal policies need to remain supportive. Over the medium term, Korea will need to maintain its tradition of fiscal prudence, especially to cope with the rapid aging of its population.
"President Roh and I discussed his vision of doubling Korea's per capita income by seizing the opportunities of globalization. Here, Korea's well-educated workforce, familiarity with advanced technology and excellent infrastructure provide a strong foundation, but its success will also depend on an ability to respond flexibly to ever changing world market conditions.
"Korea is well placed to take advantage of increasing integration and cooperation in the dynamic Northeast Asia region, but it will gain even more from integrating further in the wider global economy, for which further progress with multilateral trade liberalization will be important. In this regard, I am impressed that Korea is tackling the tough issue of liberalizing agriculture in its Free Trade Agreement with Chile, an area that is central to the success of the Doha Round. I am confident Korea can play a leading role both in advancing the Doha Round and in building globalization that works for everyone."
IMF EXTERNAL RELATIONS DEPARTMENT