Anyone wondering about the outlook for South Korea can ignore the piles of data published by the government. Forget analysts' predictions, stock prices and bond yields. More luck might be had looking at Seoul's skyline.

Seoul was just added to the list of cities planning to be home to the world's tallest building. When completed in 2008, the $1.3 billion, 580m International Business Center will top the 452m Petronas Twin Towers in Kuala Lumpur.

Far from being good news for Asia's fourth-largest economy, it could be a harbinger of problems. The risk is the so-called skyscraper curse, the uncanny correlation between the world's tallest buildings and financial crises.

Be it Kuala Lumpur in the late 1990s, Chicago in 1974 or New York in 1930, the erection of the next architectural monstrosity has been a bizarrely accurate economic indicator.

The phenomenon led Andrew Lawrence, a Hong Kong-based analyst at Deutsche Bank Securities, to come up with a "skyscraper index" for investors.

Having claim to the world's tallest man-made peak is as much about ambition as it is about excess. It's no coincidence that periods of overinvestment and financial speculation, fuelled by excessive monetary expansion, drive developers, investors and politicians to architectural one-upmanship.

Advances in design and technology are always factors. So is the desire to boast having the world's number one building. Taipei and Shanghai have been duelling with world's tallest projects (Seoul's will top both). Sure it's about architecture and engineering, but also about status. Easy money, too, which tends to fuel huge building projects and economic bubbles.

"It's these features that make skyscrapers, especially the construction of the world's tallest building, a salient marker of 20th century business cycles," Mark Thornton, a senior fellow at the Ludwig von Mises Institute in Auburn, Alabama, wrote in a new study of the phenomenon.

Now that we are into the 21st century, does all this mean South Korea's economy is doomed? Let's hope not.

President Roh Moo Hyun did not have much of a honeymoon in his first 100 days in office, which he marked this week. Instead he has been besieged by problems that include North Korea's nuclear crisis, an accounting scandal involving SK Global and bubbles in property prices and household debt  
.

But for all its troubles, the odds favour the country getting beyond these problems. It has changed many parts of its economy since the 1997 Asian financial crisis, strengthening banks, increasing transparency and reducing debt. There's much to do, however.

The chaebol, the family-owned conglomerates that tower over the economy, remain a problem. And loose credit has caused property to soar; apartment prices have risen 4 percent this year, after an average 16 percent surge in 2002.

The question is whether worse bubbles will emerge in South Korea in the years ahead. One hopes it can avoid the skyscraper curse.

Trouble is, coincidence or not, the world's tallest building projects have been excellent forecasting tools.

"Skyscrapers are the ultimate architecture of capitalism," wrote Carol Willis in her book, Form Follows Finance: Skyscrapers and Skylines in New York and Chicago.

There are a number of specific examples. In 1908 New York was home to two buildings that were the world's tallest on their dates of completion: the 47-floor Singer Building and the 50-storey Metropolitan Life Building. Both were raised amid the panic of 1907, which led to a run on US banks.

In 1929, 40 Wall Street was completed; the Chrysler Building topped it in 1930. Both coincided with the worst-ever US financial meltdown, the Great Depression. The mid-1970s saw the completion of New York's World Trade Center and Chicago's Sears Tower. Both opened amid runaway inflation, New York City's fiscal crisis and the breakdown of the Bretton Woods monetary system.

Malaysia's Petronas towers became the world's tallest in the late 1990s. As fate would have it, they were completed at the height of the Asian financial crisis. Malaysia's economy, currency and stock market plunged, along with those of Indonesia, South Korea, the Philippines and Thailand.

In each case, Thornton's study finds, a record-breaking skyscraper project was announced during the boom phase of a business cycle. It was followed by a sharp decline in financial markets and a deep recession. Each was completed as the fallout from the crisis was settling.

Perhaps South Korea can avoid all this and buck the skyscraper curse, but it will need hard work and luck to do it. - Bloomberg