The once high-flying South Korean economy is at a crossroads, a conference on Asia investment was told here Wednesday.
The export engine that propelled the economy to dizzy heights during the late 1980s has stalled and huge trade surpluses have become deficits, the managing director of Citicorp Scrimgeour Vickers (Hong Kong) told the two-day Asia/Pacific Investment Seminar.Jim Hunter said this has left South Korean authorities more concerned about future prospects for the economy.
"But we are confident that, like Japan, Korea will overcome its difficulties," he said.
Problems have been caused by the runaway real estate market, which has drawn away much cash that would have been invested in manufacturing, he said.
Inflation has added to South Korea's woes, he said, with the government's target of keeping inflation this year to 7 percent now looking grossly optimistic.
South Korean manufacturers' international price competitiveness has been eroded by huge hikes in product costs.
''Nevertheless, the outlook for the Korean economy is far from gloomy," Mr. Hunter said.
The South Korean market is due to open to foreign investors in 1992 and the financial sector is gearing up for take-off when that happens, he said.
The country is also undergoing a construction boom. The opening up of Eastern Europe should provide an outlet for South Korea's traditional lower- quality manufacturers in the medium term, he added.