South Korea’s Lee: World in new era of low growth

SEOUL (Reuters): South Korea’s president said on Monday the global economy was not simply in a temporary slump but had entered a new era of low growth and pledged to bring down inflation, which spiked to a three-year high last year.

President Lee Myung-bak reaffirmed in a televised new year address that the government would put the policy priority on bringing inflation down to close to 3 percent this year. Annual average inflation hit 4 percent in 2011.

“The waves (of economic difficulty) will likely be much higher this year. The global economy is not in a temporary slump but has entered a new era of low growth,” Lee said.

Separately, Finance Minister Bahk Jae-wan said in his new year statement the euro zone’s fiscal crisis would probably reach its worst point during the first half.

President Lee’s pledge to focus on fighting inflation came even as Asia’s fourth-largest economy is already slowing on a cooling demand from Europe and other major markets.

Lee’s conservative Grand National Party is suffering from falling popularity on a public outcry over the widening wealth divide, high prices and disappointing job growth as the country is due to hold two nationwide elections this year.

Lee is due to step down at the end of his five-year term in early 2013 and is barred by the constitution from running for a second term.