By Yi Whan-woo
The International Monetary Fund (IMF) lowered Korea's economic growth outlook for next year to 3.7 percent, Tuesday, from its previous prediction of 3.9 percent.
The IMF said the reduction reflects economic risks in Asia that has seen lower-than-expected growth this year amidst the slow economic recovery of China.
"The outlook is for continued strong growth, but risks are tilted to the downside," the IMF said in its World Economic Outlook (WEO), a bi-annual report it publishes every April and October.
"During the first half of 2013, growth in Asia generally moderated and was weaker than anticipated in the April 2013 WEO."
"This was due to a more rapid slowdown in the pace of growth in China, which affected industrial activity in much of emerging Asia, including through supply-chain links," it said.
Regarding Korea, the IMF said the country's economy is set for a modest recovery.
It also projected the country's consumer price index will rise by 2.9 percent and current account balance by 1.7 percent, while unemployment will increase to 4.3 percent.
The experts said the change made by the IMF in Korea's economic outlook for next year is not "worrisome."
"Korea is not the only country that the IMF has lowered its economic growth rate for," said Park Sung-wook, a research fellow at the Korea Institute of Finance. For instance, the IMF projected China's economic growth rate next year will be 7.3 percent, down from 8.2 percent from its earlier forecast in April. It also lowered the economic outlook next year for Japan by 0.2 percent to 1.2 percent, India by 0.9 percent to 5.1 percent, and Malaysia by 0.3 percent to 4.9 percent.
"Korea is heavily dependent on export to China and other emerging economies in Asia, and I think the IMF's projection is based on such fact.
"Considering China's economy will not grow as fast as it did in the past and its recovery remains slow, the IMF's projection on Korea is reasonable."
A different economist echoed a similar view.
"China has staggered in both exports and domestic sales this year, while the United States is delaying the pull-back of its quantitative-easing policy," said Park Hyun-soo, a research fellow at Samsung Economic Research Institute. "With signs of such slow economic recovery across the world, international think tanks in general have lowered the outlook on the global economy for next year."
The IMF projected the U.S. economy's growth in 2014 will be 2.6 percent, the Euro zone to be 1 percent, the United Kingdom with 1.9 percent, France with 1 percent, Germany with 1.4 percent, and Spain with 0.2 percent.