South Korea’s economy may not be able to recover from its current slowdown in the second half of this year mainly due to unfavorable overseas developments, local economists said Tuesday.

In an economic assessment gathering hosted by the Federation of Korean Industries, experts predicted the persistent eurozone fiscal woes are exerting negative influence on the country. They added slower than expected growth in China and the United States is weighing down growth that was originally expected to pick up pace in the second half.

“The European Union will probably post minus growth this year while economic conditions in China, which is faced with a sharp drop in real estate prices, can further pose challenges,” said Kim Joo-hyun, the president of the Hyundai Research Institute.

He said that unless there is some sort of sharp improvement, South Korea will likely experience slow growth in the July-December period.

The HRI chief added Asia’s fourth-largest economy needs to guard against inflationary pressure caused by relatively high crude prices, household debts and weak consumption.

This view was echoed by Kang Tae-young, the head of the POSCO Research Institute, who predicted only modest gains in private sector consumption and business investments.

He said that while South Korea will likely maintain its trade surplus, the favorable balance will not be caused by a rise in exports but a decrease in imports, as both the private and business sectors cut back on spending.

Others such as Lee Sang-ho, the president of the GS Research Institute of Construction and Economy, said political and economic uncertainties in the second half as the country prepares to pick its next president will further hurt the weak property market.

Jung Byung-chul, the FKI’s vice chairman, meanwhile, said that despite the challenges posed, South Korea needs to use this period to enhance competitiveness so it can be in a position to expand its market presence down the line.

The executive from the lobbying group of the country’s family-run conglomerates stressed that the country has used past challenges like the 1997-98 Asian economic collapse and the more recent financial crisis triggered by the Lehman Brothers debacle to improve its competitiveness and economic health. 

(Yonhap News)