SEOUL, – A South Korean state-run think tank on Thursday slashed the country’s economic growth outlook for next year to 2.2 percent amid a gradual economic recovery on the back of rising exports despite dwindling domestic demand.
The figure presented by the Korea Development Institute (KDI) marked a 0.1 percentage-point fall from its estimate of 2.3 percent made in August.
The think tank also lowered the forecast for this year’s economic growth to 1.4 percent from the previous 1.5 percent estimate.
The latest readings were on par with those made by the Bank of Korea (BOK) and the International Monetary Fund (IMF).
The government expected 2.4 percent growth next year, and the forecast by the Organization for Economic Cooperation and Development (OECD) came to 2.1 percent.
“The economy is expected to show a very gradual recovery to log 2.2 percent growth next year on the back of exports despite the slowdown in domestic demand,” the KDI said in a report.
“The global economy remains weak due to the continued aggressive monetary tightening paths taken by major economies to curb inflation. But the rebound in the global semiconductor cycle will help boost South Korean exports,” the report read.
The KDI put the annual inflation projection at 3.6 percent for this year and 2.6 percent for next year, up by 0.1 percentage point each from its earlier forecasts due to rising global oil prices.
The number of newly employed is expected to fall to 210,000 next year from this year’s 320,000 amid sagging domestic demand, according to the KDI.
“South Korea could experience a delay in the economic recovery in case geopolitical tensions in the Middle East push up global oil prices and China’s property market worsens to affect its construction industry and investment,” the report said.
In September, exports rose for the first time in 13 months by rising 5.1 percent on-year to US$55 billion on the improvement of the chip sector.
The country’s industry output advanced 1.1 percent on-month and marked 2.8 percent growth from a year earlier in September, as production from the chip industry jumped 12.9 percent on-month and 23.7 percent on-year, according to government data.
In a monthly economic assessment report issued earlier this week, the KDI said that the economic slowdown was beginning to ease, led by the semiconductor industry, while external uncertainties persist over global high interest rates and the Israel-Hamas war.
Source: Yonhap News Agency