S Korea economy faces long-term challenges: IMF

---

SEOUL, June 13 (AFP): South Korea's economy is in good shape but faces longer-time challenges from an ageing society and cheaper foreign manufacturers, the International Monetary Fund (IMF) said today.
It urged policymakers to create a more attractive foreign investment climate and to continue developing the financial sector, as part of efforts to transform the economy.
"The Korean economy is in good shape," said an IMF statement issued after an annual two-week-long consultation.
With domestic demand holding up and exports continuing to perform well, it forecast growth of 4.4 per cent for this year, the same as the central bank's estimate.
Inflation was expected to edge up due to higher oil prices but remain well within the Bank of Korea's target range, and the current account was expected to remain in broad balance for the year.
The IMF said the nascent recovery in domestic demand could face shocks such as a further oil price rise or another bout of global financial turbulence, but this scenario should be manageable.
It cited "pockets of concern" in the financial sector-a possible fall in housing prices complicating mortgage repayments and recent rapid growth in lending to small and medium-size enterprises.