updated 1/6/2009 5:47:06 PM ET 2009-01-06T22:47:06

South Korea said Tuesday it will invest 50 trillion won ($38 billion) over the next four years on environmental projects in a "Green New Deal" to spur slumping economic growth and create nearly a million jobs.

"We are in an unprecedented global economic crisis," Prime Minister Han Seung-soo said in a statement. "We must respond to the situation in an urgent manner."

Energy conservation, recycling, carbon reduction, flood prevention, development around the country's four main rivers and maintaining forest resources are among projects to be pursued under the plan, approved at a Cabinet meeting.

Beating U.S. President-elect Barack Obama to the punch, Han said the government's "Green New Deal Job Creation Plan" will create 960,000 new jobs, with 140,000 of those realized this year. Obama has promised to stimulate the U.S. economy with green jobs but specifics have yet to be released.

Trade-dependent South Korea is looking for ways to boost its slowing economy as global demand wanes for traditional mainstay goods such as automobiles and technological products.

Exports fell 17.4 percent in December from the same month the year before, following a drop of 18.3 percent in November, according to government figures. Unemployment, though still at a relatively low 3.1 percent, is expected to rise.

Amid deteriorating conditions, some private economists say Asia's fourth-largest economy is facing the possibility in 2009 of suffering its first contraction on an annual basis since 1997, when it was in the throes of the Asian economic crisis.

South Korea's central bank is more optimistic, saying last month that the economy will grow 2 percent in 2009, compared with a revised estimate of 3.7 percent growth or 2008. The economy expanded 5 percent in 2007.

President Lee Myung-bak said last month that South Korea's economy may shrink in the first half of next year due to fallout from the global financial crisis but may still attain a positive figure for the year.

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