Forecast for S. Korean Economy Downgraded: Think Tank

A private think tank Sunday downgraded its projection for the South Korean economy's growth this year, reflecting concerns over a possible U.S. slowdown and

financial woes in global markets.

South Korea's economy will grow 4.7 percent for this year from the 5 percent advance previously forecast, the Samsung Economic Research Institute (SERI) said in a report. Asia's fourth-largest economy is projected to expand 4.9 percent in the first half and gain 4.4 percent in the next six months.

"We have decided to lower our growth outlook, taking into consideration a faster-than-expected downturn of the U.S. economy and continuing financial woes in global markets," a senior SERI economist said. Such overseas downside risks will dent South Korea's major export markets and lead to slower economic growth,

he added.

The growth adjustment by SERI, a research unit of Samsung Group, South Korea's largest conglomerate, came as the new government is pushing to attain 7-percent annual growth during its five-year term.

The forecast is in line with recent projections by major foreign investment banks, which also adjusted their outlooks on worries that U.S. subprime mortgage problems, high oil prices and mounting inflation pressures could have a negative impact on the export-driven South Korean economy.

Last year, South Korea's economy was estimated to have grown 4.9 percent, according to the Bank of Korea.

Meanwhile, the think tank predicts that the nation's consumer prices will rise 3.3 percent this year, which is within the Bank of Korea's target range of 2.5-3.5 percent. The jobless rate is also expected to stand at 3.2 percent, and the South Korean currency to remain at 935 won to the U.S. dollar, it added.

Exports, one of South Korea's key growth engines, were forecast to expand 10.6 percent in 2008 from a year earlier, continuing their double-digit growth rate since 2003, according to the report. (Yonhap)