Korea’s growth to be assailed next year

By Jung Sung-ki

Korea’s economy is expected to grow less than 4 percent next year amid deepening worries about eurozone debt problems and slowing demand from major economies, according to economic think tanks and other financial institutions.

They agree that Korea is expected to post about 3.7 percent growth next year. This year’s growth forecast is also expected not to exceed 4 percent.

Earlier this week, the state-funded Korea Development Institute (KDI) forecast in its twice-yearly report that Asia’s fourth largest economy will grow by 3.6 percent this year, down from its May estimate of 4.2 percent. For 2012, the institute expected 3.8 percent growth, down from 4.3 percent.

“Amid the global downturn, the uncertainty surrounding the domestic economy's growth has increased,” the KDI said in a statement, adding the slowdown would continue until at least the first half of next year.” Export growth will slow, while local demand is expected to eke out a modest gain, supporting the overall economy,” it said.

In a similar vein, the Korea Institute of Finance forecast the economy will expand 3.7 percent next year.

Private think tanks painted a grim picture for Korea’s economy.

Samsung Economic Research Institute and LG Economic Research Institute both predict 3.6 percent growth.

“It would be inevitable for the Korean economy to be influenced again by external factors next year,” said Kwon Soon-woo, a senior economist at Samsung Economic Research Institute.” Even the economies of advanced nations including the United States are not immune from eurozone problems.”

Of foreign investment banks, UBS forecast a 2.8 percent expansion, while Nomura Securities predict 5.8 percent.

Goldman Sachs, BNP Paribas, Barclays and Morgan Stanley all expect growth in the 3-percent range for next year.

All are lower than the government's earlier 4.5 percent growth outlook. With great optimism the Bank of Korea expects the economy to expand 4.6 percent next year.

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