The creation of corporations also hit 3,647 in the nation's six largest cities in April, a record high since last June. But very few people believe that the indicators will ensure the clear recovery of the nation's sagging economy in the second half of the year and thereafter. On the other hand, the U.S. Federal Reserve cut the key inter-bank interest rate by another half a percentage point, to 4 percent per annum on Tuesday, to shore up the slowing economy. This is the fifth rate cut this year in the attempt of Fed Chairman Alan Greenspan to show a clear sign of U.S. economic recovery. The United States has been suffering from a high jobless rate, standing at 4.5 percent in April compared to a low of 3.9 percent last October, although the economic growth is estimated to have doubled to 2 percent in the first quarter of the year compared to the previous quarter.
Analysts expect another rate cut by the end of the first half of the year.
The Fed action came in response to the declining output, weak business investment, big job cuts and fragile consumer readings, analysts said. Under these circumstances at home and abroad, the local business community has called for drastic deregulation to facilitate brisk business activities. This has even sparked off disputes between rival political parties over the policies on chaebol and other business regulations. Businesses have claimed that domestic demand and exports have shrunk rapidly due to tough regulations on business activities. In particular, there has been negative facility investment this year due to the 25-percent ceiling in equity investment and obligatory 200 percent ceiling in debt ratio, they insisted.