Posted : 2012-11-13 11:42
Updated : 2012-11-13 11:42

Korean economy forecast to grow 3.2% next year

Korean brokerage houses and economic think tanks predict the local economy will expand an average of 3.2 percent in 2013 from this year amid a protracted global economic slump, sources said Tuesday.

The forecast by 15 securities companies, private economic research institutes and state think tanks hovers well below the 4 percent estimate made by the Ministry of Strategy and Finance two months earlier, but it is slightly higher than predictions made by foreign investment banks, according to the sources.

In September, the financial ministry expected the economy will maintain stable growth down the road on an improving global economy, climbing 4 percent and 4.3 percent in 2013 and 2014, respectively.

Of the institutions, Mirae Asset Securities Co. made the highest forecast of 3.6 percent, while Samsung Securities Co. projected Asia's fourth-largest economy will grow 2.6 percent on-year.

The institutions' average growth prediction, however, is slightly higher than outlooks offered by foreign investment banks. Last month, major foreign investment banks also expected South Korea's economy to grow 3.1 percent in 2013, with Morgan Stanley projecting a 3.9 percent gain.

The bearish outlook comes amid growing concern that the global economy will not likely recover easily next year amid anemic domestic consumption.

In October, the Bank of Korea (BOK) slashed the country's 2013 growth outlook to 3.2 percent from 3.8 percent in October. The local economy grew 0.2 percent on-quarter in the third quarter, its slowest pace in three years.

According to the BOK, Korean consumers' confidence fell to the lowest level in nine months in October as the economic outlook remained bleak amid the eurozone debt crisis.

"Given the dour market conditions in exports and unfavorable exchange rates, South Korea's economic growth is unlikely to reach the government's estimate of 4 percent," said Oh Sung-jin, an analyst at Hyundai Securities Co.

On Monday, the local currency closed at 1,088.60 won against the greenback. It has continued to hover below the 1,100 won level since Oct. 25, when the won breached the level for the first time since Sept. 9, 2011.

A stronger won inflicts foreign exchange losses on exporters, making South Korean goods more expensive overseas, which damages local firms' export earnings. (Yonhap)

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