The Korean economy could be in greater difficulty and its performance could fall short of the goal the government set late last year, if the global economy worsens, President Lee Myung-bak said on Friday (Jan. 9).

At a policy presentation attended by about 230 city, county and district mayors at Cheong Wa Dae that day, Lee said the economy could plummet rapidly in the first quarter. He added the Korean economy will become inevitably as difficult as the global economy, given its heavy dependence on exports.

Nonetheless, Korea has more favorable conditions when it comes to key interest rate and budget spending, Lee went on to say. The key rate of the United States and Japan is near zero, while that of the European Union hovers at around 2 percent. Korea is in a better situation to implement policies to further lower the key rate, with its benchmark rate standing currently at 3 percent, the President said. He also said Korea has the lowest debt ratio among the OECD members and can spend budget in a more decisive manner than the other countries.

Lee predicted that the world economy is expected to be toughest in the first and second quarters and pick up a little in the third and fourth ones. He said that the Chinese government is expected to carry out an enormous economic recovery plan and the United States will come up with many more recovery programs upon Barack Obama''s inauguration.

While expressing deep concerns about small business owners and low-income earners, the President called for unprecedented economic stimulus packages to deal with the unheard-of financial crisis. He made clear that early budget spending should be carried out as previously planned from the first quarter. He also emphasized the development of green growth industries and asked for immediate energy-saving plans of local authorities.

During the session, the mayors put forward their individual plans for budget spending and job creation, and made relevant suggestions to the President.

Meanwhile, the Bank of Korea cut its key rate from 3 percent to 2.5 percent on Jan. 9.