South Korea's central bank is forecasting the nation's economy to shrink by 2.4 percent in 2008.

The Bank of Korea's economic forecast, issued Friday in Seoul, predicted what would be the country's first GDP fall since 1998.

The contraction marks a revision from the central bank's December forecast, which predicted GDP would grow by 2.0 percent in 2009 and 4.0 percent in 2010.

The BoK said it now predicts GDP growth of 3.5 percent in 2010, led by a recovery in domestic and external demand.

The bank forecast also predicts that economic stimulus programs around the globe will not cause the world's economy to recover rapidly. Despite stimulus measures by a number of countries, it will take some time for the global economy to recover, the BoK said. The future path of the Korean economy is likely to hinge greatly on if and to what degree the global financial instability can be resolved and the global economy picks up again and whether policies adopted will produce their intended effects.

Domestically, the bank said it expected unemployment to register 3.6 percent for the year, but looks for a rise in employment of 140,000 in 2010 thanks to an expected modest recovery in consumption and investment.

Consumer price inflation is expected to stand at an annualized rate of 2.7 percent, mainly due to a stabilization of global raw material prices and wages. Core inflation was projected to run at about 1.6 percent in 2010.

In the area of foreign trade, the central bank said the current account surplus is likely to register around 18 billion dollars in 2009. Exports are expected to decrease due to the global economic recession, but imports are forecast to decline to a greater extent owing to the drop in oil prices and sluggish domestic demand, the report said.

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