South Korea's economy expected to grow 2.8% this year

South Korea's economy is expected to grow 2.8 percent this year, a private research institute said Thursday, as exports are likely to lose steam amid weaker private consumption.

The forecast by LG Economic Research Institute (LGERI) is lower than the 3 percent projection set in January by the Bank of Korea.

Helped by the government's stimulus spending, the nation's economy expanded 1.1 percent on a quarterly basis in the first quarter of this year. It marked a rebound from a 0.2 percent contraction a quarter earlier.

LGERI said the economy is unlikely to grow more than 1 percent from the second quarter of this year, as the semiconductor boom, which has driven up South Korea's exports, is coming to an end.

Also, the global demand for South Korean manufactured goods could decline in the face of escalating trade tensions between the United States and China, the research institute said.

Data showed the nation's exports fell in April, marking the first decline in 18 months.

Outbound shipments reached US$50.06 billion last month, down from $50.84 billion a year ago, according to the data compiled by the Ministry of Trade, Industry and Energy. Imports surged 14.5 percent on-year to $43.45 billion.

LG expects the Korean currency to average 1,060 won against the U.S. dollar compared with last year's 1,131 won. A strong won will make locally made goods more expensive abroad, which can hurt overall outbound shipments. (Yonhap)