Ongoing expansionary measures taken by many countries to help boost their economies are stop-gap measures for economic rebalancing, the chief of South Korea's central bank said Thursday, stressing that structural reforms are key to preventing future crises and inducing sustainable growth.

"The recent expansionary macroeconomic policies undertaken in response to the sluggish economic growth are, as I see it, temporary measures, and not ultimate solutions to rebalancing. They serve to mature conditions for carrying out structural reforms that are essential to remedying the imbalances," Bank of Korea (BOK) Gov. Lee Ju-yeol said in a speech at the conference jointly organized by the BOK and the IMF Regional Office for Asia and the Pacific.

Lee said the global financial crisis in late 2008 stemmed from global imbalances and structural imbalances, which worsened in each country during the crisis but remain in place and continue to limit recovery.

The external imbalances between countries running current account surpluses and those running current account deficits have worsened. Various internal imbalances are also accumulating, such as financial imbalances, increased fiscal deficits, and widening gaps in output between the service and the manufacturing sectors, according to the BOK chief.

The external imbalances seem to have narrowed somewhat recently, but it is because of the sluggishness of demand in the deficit countries, rather than any improved competitiveness in their export sectors or expansion in domestic demand in the surplus countries, he said.

"When the global economy picks up, the external imbalances are likely to worsen again. Without fundamental rebalancing, a full-fledged recovery of the world economy may be a remote possibility," he said. 

But rebalancing within a short period of time is no trivial task, and it will require more concerted policy efforts than are currently being made, according to Lee.

The BOK chief stressed that the current account surplus economies need to expand their domestic sectors, and thereby establish a virtuous circle between output, employment, and income.

In the meantime, the current account deficit countries need to nurture their manufacturing industries, so as to improve their bases for exporting. 

In individual countries, the imbalances between their real and financial economies, and between their manufacturing and service sectors, need to be corrected, while they must also work to reduce their debts and the disparities between income classes within their populations, he said.

"The correction of economic imbalances is essential for preventing future crises and for achieving sustainable growth," he said. (Yonhap)