The Organization for Economic Cooperation and Development said Tuesday that it revised downward Korea’s 2014 economic growth outlook from 4 percent to 3.8 percent, as Asia’s fourth-largest economy is highly exposed to external factors stemming from unorthodox policies implemented by advanced economies.

The OECD, however, raised its initial 2013 growth projection for the Korean economy from 2.6 percent to 2.7 percent on the back of “modest” global recovery.

The global economy is expected to grow 2.7 percent this year, and 3.6 percent next year.

It suggested that Korea would need to keep inflation in check with its monetary policy as its economy recovers next year.

“As the recovery gains pace (in Korea), monetary policy will need to tighten to keep inflation in the target range,” the OECD said in a report. “However, if downside risks materialize, Korea has scope to use both monetary and fiscal stimulus to support growth.”

Meanwhile, Korea Development Institute, the state-run think tank, forecast that the Korean economy will head for a moderate recovery and grow 3.7 percent next year, it said Tuesday.

Korea’s continued brisk exports and revived private consumption will drive the economy to hit its 2014 growth projection, the think tank added.

KDI initially projected in the first half of this year that Korea would grow 3.6 percent next year and 2.6 percent this year. Its growth projection for 2013 is now 2.8 percent.

Its forecast is the same as the International Monetary Fund’s 3.7 percent growth projection for Korea, and is lower than that of the Ministry of Strategy and Finance and the Bank of Korea.

The Finance Ministry projected Korea to grow 3.9 percent next year, while the central bank expected Korea’s gross domestic product to grow 3.8 percent.

The central bank cut its 2014 outlook from 4 percent to 3.8 percent, after taking the International Monetary Fund’s Korea revision into account. The IMF lowered its growth forecast for Korea from 3.9 percent to 3.7 percent on expectations of weaker global demand in 2014.

KDI’s 2014 projection showed that Korea’s real growth has fallen short of government predictions for four consecutive years.

The think tank expected the rate of private consumption growth to reach 3.6 percent next year, and inflation to hit 2 percent, well under the target of 2.5-3.5 percent for 2013-2015.

Korea is expected to see its consumer price growth to slow due to weak demand. Its consumer prices index will reach 1.1 percent this year.

By Park Hyong-ki (hkp@heraldcorp.com)