Economic growth to slow to 2.8%: think tank

Korea's economic growth is expected to slow to 2.8 percent this year from a previous 3.5 percent forecast due to persistent economic uncertainties at home and abroad, a private think tank said Wednesday.

In its full-year growth outlook for Asia's fourth-largest economy, Hyundai Research Institute (HRI) based its downgrade on a prediction that South Korea's economy will lose steam in the second half.

HRI's latest forecast is far lower than predictions made by the central bank and the government. The Bank of Korea (BOK) still expects the South Korean economy to grow 3 percent in 2012, and the finance ministry set a 3.3 percent growth forecast.

"The country should expand 1.3 percent on-quarter in the remaining quarters to maintain at least 3 percent growth for the all of 2012," said the HRI.

"But it looks almost impossible, as South Korea's sluggish exports and domestic consumption in the third quarter will drag heavily on overall economic growth," added the HRI.

South Korea's current account surplus rose to a fresh record high in July, but the surplus of the goods balance widened due to falls in exports and imports, according to the BOK.

The think tank said the global economic situation will not greatly improve in the coming months, as the United States will face a slower-than-expected recovery and China's economic growth will cool down, while Europe will continue to suffer ongoing debt problems.

The domestic economy will also remain sluggish due to rising household debts and a slump in the local properties market, the HRI said.

"If the economy tries to achieve 3 percent growth, emergency measures are required," said the think thank, citing additional fiscal stimulus plans to boost corporate investments and household consumption. (Yonhap)