By Kim Tae-gyu
Staff Reporter
Overseas investment banks expect Korea will be able to chalk up 5-percent growth this year. They estimate that Asia's fourth-largest economy also expanded 0.2 percent in 2009 from the previous year.
The Korea Center for International Finance (KCIF) said Tuesday that 10 main foreign investment banks projected that the Korean economy will expand 5 percent this year and 4.1 percent next year on average.
This is in line with the official target of the Seoul administration while higher than the 4.6 percent of the Bank of Korea, 4.5 percent of the International Monetary Fund and 3.7 percent of the World Bank.
Non-U.S. entities were found to come up with the most optimistic forecasts by and large as Nomura Securities and Deutsche Bank projected 5.5-percent growth, followed by 5.4 percent by BNP Paribas.
In comparison, U.S.-based Goldman Sachs and Citibank predicted 4.8 percent and 4.7 percent growth, respectively. UBS has also presented a sub-par prediction of 4.6 percent.
Gross domestic product (GDP) of the two emerging economies of China and India are expected to grow by 9.8 percent and 7.9 percent apiece in 2010. But those of the United States and Japan are predicted to be low at 3 percent and 1.5 percent.
The KCIF said that the 5-percent growth is lower than for those for Korea's regional rivals such as Singapore with 6.2 percent and Taiwan with 5.3 percent. But the KCIF sees things in a different way.
``Korea is estimated to have expanded by 0.2 percent last year while its competitors Hong Kong, Singapore and Taiwan all suffered from contractions of 2 or 3 percent in 2009,'' a KCIF official said.
``Hence, you are required to understand that Korea's basis is different from those of Singapore or Taiwan. Our 5-percent growth is tantamount to almost 7 or 8 percent for the neighboring countries,'' he said.
The 10 investment banks' consensus on Korea's consumer price growth rates stands at 3 percent this year and 3.2 percent next year from 2.8 percent in 2009.
In addition, they projected that the current surplus would substantially decline from 5.1 percent of GDP last year to 1.9 percent this year and 0.8 percent next year.
``Generally speaking, international invest banks appear to be optimistic about the Korean economy ― the growth rate forecasts are relatively high while those for prices are stable,'' a Seoul analyst said.
``However, the concerns are that the amount of current surplus will head down starting this year,'' he said.