Korea's GDP growth expected to fall below 2%

By Lee Min-hyung

Global organizations are becoming more pessimistic about the Korean economy, with nine out of 10 global investment banks forecasting its GDP growth for 2019 to fall below the 2 percent mark.

The 10 global lenders' average figure stood at 1.9 percent, a major setback from the 2.7 percent expansion of 2018.

According to the forecast from 10 overseas investment banks, including Citibank and Credit Suisse, Korea's economy will end up growing between 1.8 and 2 percent this year.

On average, they expect the nation's economy to recover slightly from the sluggish growth next year and reach up to 2.1 percent amid diminishing signs of external political uncertainties represented by the trade dispute between Washington and Beijing.

HSBC was the only firm to have placed the nation's 2019 economic growth outlook at 2 percent.

Morgan Stanley forecast in a recent report that the Korean economy would bottom out in the fourth quarter amid a trade truce between the world's two largest economies.

Korea is more vulnerable to the trade war than other neighboring Asian countries but will benefit more than any other country once the trade dispute comes to a peaceful end, according to the investment bank.

Against this backdrop, the Korean economy is expected to jump on a recovery track next year amid signs of thawing relations between the U.S. and China, according to the report.

The government-driven expansionary fiscal policy next year is also a positive signal for economic growth next year, according to local experts.

"The nation's economic growth rate is forecast to reach 2.1 percent next year on the back of the improving market conditions for the nation's mainstream chip industry and the government-driven expansionary fiscal policy," DB Financial Investment Park Sung-woo said.

The brokerage also predicted that the nation's annual economic growth rate next year will be 2.1 percent.

J.P. Morgan predicted the local economy to grow at 2.3 percent next year, the highest among the 10 overseas investment banks.

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