South Korea slashes 2012 growth outlook by 1 percent

SEOUL - Agence France-Presse

A view a ship yard in South Korea’s Geoje, Gyeongnam is seen above. EPA photo

The South Korean government yesterday cuts the nation’s growth outlook for 2012 and 2013, citing the eurozone debt crisis and US fiscal woes that continue to dampen global demand.

In a biannual economic outlook, the finance ministry revised its earlier estimate of 4 percent growth in 2013 to 3 percent, and the 2012 estimate from 3.3 percent to 2.1 percent.

 “The economy continues to slow... as global demand dragged down by prolonged eurozone debt crisis and lingering uncertainty dampen sentiment,” the ministry said in a statement.

Hopes for improvement

The growth of Asia’s fourth-largest economy will continue to be limited in the first
half 2013, but will “slightly improve” in the latter half when its major markets are
expected to show signs of recovery, it added.

Exports account for about a half of the South’s economy and have been pummelled recently by a general slowdown in developed countries. But the ministry predicted overseas shipments of cars, mobile gadgets and other products and services would increase 4.3 percent next year after shrinking 1.3 percent in 2012.
 
The forecast was in line with a World Trade Organisation estimate that global trade will expand 4.5 percent next year from 2.5 percent in 2012. Imports will increase 4.6 percent in 2013, the finance ministry added, resulting in an annual current account surplus of around $30 billion, down from this year’s estimate of $42 billion.
 
Consumer prices are expected to rise 2.7 percent next year, faster than this year’s 2.2 percent but within the central bank’s target range of between 2.5 and 3.5 percent.
 
The ministry pledged a “flexible” fiscal policy to help stimulate the economy, including frontloading at least 60 percent of the entire 2013 budget in the first half of the year.