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South Korea Minister:Not Time Yet To Withdraw Expansionary Policy

SEOUL -(Dow Jones)- It is still too early for South Korean authorities to exit from their expansionary monetary policy even though the local economy recovered at a "faster than expected" pace in the third quarter, Vice Minister of Strategy and Finance Hur Kyung-wook said Tuesday.

Based on past economic cycles, the risk stemming from hasty rate hikes after a period of monetary easing is far bigger than that from progressive rate hikes, Hur said in a local television interview.

Hur's comment is a reiteration of the government's stance and came a day after the country reported that its gross domestic product expanded at a faster-than- expected 2.9% in the third quarter from three months earlier, prompting further speculation on when the Bank of Korea will start to raise interest rates.

The government said Monday that the local economy could register growth this year, in contrast to the official forecast of 1.5% contraction.

The recovery isn't strong enough currently as capital investment is still falling and job market conditions remain fragile, Hur said.

The government must be very prudent in crafting its exit strategy, taking account risks such as global oil prices and the foreign exchange rate, Hur added.

-By Kanga Kong, Dow Jones Newswires; 822-2198-2230; kanga.kong@dowjones.com

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