Growth Could Fall Below 4% Next Year
By Lee Hyo-sik
Staff Reporter
Most economic research institutes are pessimistic about Korea's economic outlook for next year with some floating the idea that its growth rate could fall below 4 percent.
They project that despite easing inflationary pressure, the world's 13th largest economy will expand at a slower pace in 2009 than this year, saying the ongoing U.S. financial market debacle and its negative ripple effects across the globe will reduce exports.
The Bank of Korea (BOK) is considering revising down its 2009 growth projection, citing slowing exports on top of prolonged slump in domestic demand and investment. It had forecast earlier that the nation's gross domestic product (GDP), the total value of goods and services produced in the country in a given period, would perform better next year after recording a 4.6 percent expansion this year.
``There are many variables now than before to consider in projecting the next year's growth. Despite falling oil prices, the global economic slowdown triggered by the U.S. financial market crisis will likely accelerate and have a greater impact on the Korean economy,'' a BOK economist said, indicating its 2009 growth rate will be pushed downward.
LG Economic Research Institute said that Korea's GDP increase could fall below 3.5 percent next year. ``It will be difficult for the economy to rebound next year as the ongoing U.S. financial market trouble will persist longer and bring about a greater fallout on the world's largest economy,'' it said in a report.
The Korea Institute of Finance (KIF) was a bit more optimistic about the outlook, projecting the Korean economy will expand by about 4 percent in 2009 with the growth getting faster in the second half than the first half. It said business conditions will be worse early next year than the latter half of this year.
Other major domestic institutes, including Samsung Economic Research Institute, are also set to lower their 2009 growth forecast. Korea Economic Research Institute said in a recent report that the nation will be able to achieve over 4 percent growth next year only if a range of planned tax cuts is implemented as scheduled.