By Lee Hyo-sik
Staff Reporter
The Bank of Korea (BOK) is widely expected to revise upward its 2010 growth projection for Korea to possibly above 5 percent from the current 4.6 percent, as the nation's economy is gaining momentum on the back of continuous strong exports and reviving private consumption.
A senior BOK official said Monday that the nation's gross domestic product (GDP) will expand by more than 4.6 percent this year compared to 2009, hinting that the central bank will likely raise its official growth forecast for 2010 on April 12, when it releases a revised economic outlook.
The government has said that the Korean economy will grow 5 percent from the previous year, saying its continued expansionary fiscal policies will facilitate the ongoing economic rebound and encourage private sector activities ― corporate investment and consumer spending ― to pick up toward the year's end.
In December last year, the BOK said the economy will expand 5.9 percent in the first half of the year from a year earlier, with the second-half growth rate slowing to 3.4 percent. For the whole year, the GDP will increase 4.6 percent.
But with stronger-than-expected industrial output and continued strong exports in the first quarter of 2010, the central bank has become more bullish about this year's outlook.
According to Statistics Korea, industrial production jumped 19.1 percent in February from the same month last year, marking a year-on-year rise for eight consecutive months. In January, the output surged 36.9 percent from a year ago, the largest expansion since July 1976 when it soared 38.8 percent.
Exports also surged 36.6 percent to $101.6 billion in the first quarter from the previous year, much higher than the BOK's estimate of 13.5 percent.
The central bank said the business survey index (BSI) for 2,310 manufacturers nationwide climbed to 105 for April, up from 101 in March and the highest level since December 2002 when the index stood at 111.
Separately, the Ministry of Knowledge Economy reported that after surveying 611 manufacturers across the country, the BSI for the second quarter expanded to 117 from 100 the previous quarter, indicating that companies are more upbeat about business conditions for the coming months.
With a series of these upbeat economic indices, the majority of private analysts here expect the BOK to raise its 2010 growth projection to about 5 percent in the coming days. After the central bank revises upward its 2010 GDP forecast, private economic research institutes are expected to follow suit.
Recently, the Bank of America and Merrill Lynch upped their 2010 GDP growth estimate for Korea to 6.2 percent, while putting the 2011 projections at 5 percent. In February, the KDB Research Institute raised its 2010 growth forecast to 4.7 percent from an earlier 3.8 percent.