IMF: Slower growth for South Korea

SEOUL - Agence France-Presse

A trader sits in front of a screen showing the Korea Composite Stock Price Index. AP photo

The International Monetary Fund warned yesterday of likely slower growth for South Korea this year due to the faltering global economy, joining a series of think-tanks which have slashed their predictions.

The IMF, after its six-monthly meeting with Seoul authorities, said growth will likely be weaker than the 3.5 percent the fund projected in April, possibly down to 3.25 percent. The export-reliant economy, Asia’s fourth-largest, expanded 2.8 percent year-on-year in the first quarter -- the weakest growth in two and a half years. It also saw exports fall year-on-year for a third straight month in May on waning demand from debt-hit Europe and a slowdown in its biggest trading partner China. The state-run Korea Development Institute in May cut its growth forecast for 2012 to 3.6 percent from 3.8 percent. The Bank of Korea (the central bank) in April cut this year’s outlook to 3.5 percent from 3.7 percent. Gross domestic product grew 3.6 percent in 2011.

The IMF said yesterday it expects economic activity in the second half of 2012 to expand moderately thanks to free trade pacts with the European Union and the U.S. It also supported the Bank of Korea’s decision this month to hold the key interest rate unchanged for a 12th straight month, calling it appropriate amid global economic woes and uncertainty.