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More and more economic research institutes are raising the possibility that Korea’s economic growth will stay below 1 percent per quarter throughout 2014.
Their gloomy outlook followed an earlier projection by the Finance Ministry that the GDP growth could continue to post less than 1 percent on a quarterly basis next year.
The ministry’s forecast, unveiled in the first half of 2013, had been interpreted among market participants as adding pressure on the Bank of Korea to boost the economy by pushing down the benchmark interest rate.
The BOK’s projections are in line with the ministry. The central bank, in its revised outlook, predicts that growth will stand at 0.9 percent in the first quarter of 2014, 1.0 percent in the second quarter, 0.9 percent in the third quarter and 0.9 percent in the fourth quarter.
The estimates are lower than the GDP growth rate of 1.1 percent in each the second and third quarters, between April and September 2013.
On a yearly basis, 2014 growth is projected to stay below 4 percent, according to the BOK and private think tanks at home and abroad.
Last week, the Organization for Economic Cooperation and Development downgraded its 2014 economic outlook for Korea from 4 percent to 3.8 percent, pointing out the nation’s volatile exchange rates and record-high consumer debt.
The OECD said that household debt will continue to pose a threat to the economic growth.
“With exports accounting for more than half of GDP, Korea is particularly sensitive to global economic conditions and exchange rate shifts,” said the France-based organization. “The high level of household debt, which reached 164 percent of household disposable income at the end of 2012, will continue to constrain private consumption growth.”
The announcement comes after the OECD’s earlier prediction in May that Asia’s fourth-largest economy would expand by 4 percent next year. The organization also revised its 2013 outlook to 2.7 percent from the previous 2.6 percent.
Last month, the International Monetary Fund trimmed its growth estimate for the Korean economy next year to 3.7 percent, saying that global growth remains low and downside risks persist.
In its previous forecast in early 2013, the IMF predicted South Korea would expand at a pace of 3.9 percent in 2014.
By Kim Yon-se (kys@heraldcorp.com)
Their gloomy outlook followed an earlier projection by the Finance Ministry that the GDP growth could continue to post less than 1 percent on a quarterly basis next year.
The ministry’s forecast, unveiled in the first half of 2013, had been interpreted among market participants as adding pressure on the Bank of Korea to boost the economy by pushing down the benchmark interest rate.
The BOK’s projections are in line with the ministry. The central bank, in its revised outlook, predicts that growth will stand at 0.9 percent in the first quarter of 2014, 1.0 percent in the second quarter, 0.9 percent in the third quarter and 0.9 percent in the fourth quarter.
The estimates are lower than the GDP growth rate of 1.1 percent in each the second and third quarters, between April and September 2013.
On a yearly basis, 2014 growth is projected to stay below 4 percent, according to the BOK and private think tanks at home and abroad.
Last week, the Organization for Economic Cooperation and Development downgraded its 2014 economic outlook for Korea from 4 percent to 3.8 percent, pointing out the nation’s volatile exchange rates and record-high consumer debt.
The OECD said that household debt will continue to pose a threat to the economic growth.
“With exports accounting for more than half of GDP, Korea is particularly sensitive to global economic conditions and exchange rate shifts,” said the France-based organization. “The high level of household debt, which reached 164 percent of household disposable income at the end of 2012, will continue to constrain private consumption growth.”
The announcement comes after the OECD’s earlier prediction in May that Asia’s fourth-largest economy would expand by 4 percent next year. The organization also revised its 2013 outlook to 2.7 percent from the previous 2.6 percent.
Last month, the International Monetary Fund trimmed its growth estimate for the Korean economy next year to 3.7 percent, saying that global growth remains low and downside risks persist.
In its previous forecast in early 2013, the IMF predicted South Korea would expand at a pace of 3.9 percent in 2014.
By Kim Yon-se (kys@heraldcorp.com)
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