By Yoo Choonsik
SEOUL, Feb 10 (Reuters) - South Korea's new finance minister gave up his predecessor's rosy economic targets soon after taking office on Tuesday and pledged to try hard to recover confidence from investors toward the country's economic policy.
Yoon Jeung-hyun, 62, a former financial regulator, said he felt uneasy to admit that Asia's fourth-largest economy will contract this year for the first time in 11 years but added winning investors' confidence was more important.
"The first thing the government needs to do to recover confidence is being frank," Yoon told reporters soon after taking office, replacing Kang Man-soo, whose flip-flops in comments on policy last year had sometimes roiled markets.
Yoon said gross domestic product would probably contract by 2 percent this year and the number of people in employment would drop by 200,000, sharply cutting previous targets set at 3 percent economic growth and job growth of more than 100,000.
Analysts said Yoon's style of speaking in an objective manner and trying hard to be frank on key subjects would help investors better understand the government and make things much easier to predict.
"It was a good start for him today. The revised forecasts means the government gave up assumptions that nobody can acknowledge," said Kong Dong-rak, a fixed-income analyst at Hana Daetoo Securities.
The International Monetary Fund also forecast last week South Korea's economy would contract by 4 percent, which would mark the sharpest contraction since 1998, when the economy shrank 6.9 percent in the aftermath of the Asian financial crisis.
South Korea's central bank is also due to revise its 2 percent growth target in April.
Kang had suffered from extremely poor support from markets from early days since taking office in early 2008 for flip-flops in his comments mainly on whether the won should move.
He made a series of comments in early 2008 suggesting that he preferred a weaker won to narrow a current account gap but had to pour tens of billions of dollars from the foreign reserves for several months thereafter on stopping the currency's plunge.
In stark contrast to his predecessor, Yoon said during a parliamentary confirmation session on Monday that it was best for him not to comment on the exchange rate.
Analysts said Yoon was also well received by market players because he has little political connection with President Lee Myung-bak or the governing party.
Yoon had led an implementation of strict mortgage lending controls between 2004 and 2007 as the head of the Financial Supervisory Commission, helping cool the housing price bubble.
He spent most of his nearly 40-year career at the finance ministry and other government posts, and had also served as a director of the Asian Development Bank. (Editing by Jan Dahinten)