Goldman Sachs said on Tuesday that the benchmark Korea Composite Stock Price Index is expected to rise to 2,350 points and the key interest rate to 3 percent by the end of 2014, amid the economic recovery of its largest trading partners.

“Korea is expected to surpass the world average in growth rate (in 2014),” said Kwon Goo-hoon, managing director and chief Korea strategist at the Korean operation of Goldman Sachs, in a press briefing in Seoul.

Kwon pointed out that the accelerating economic growth in the United States and Europe, coupled with China’s steady growth, would be a significant contributor to its 3.7 percent growth outlook for 2014. In 2012, the United States and Europe imported the largest share of Korean value-added goods, 17 percent and 14 percent, respectively, according to World Trade Organization data.

The key interest rate will rise to 3 percent, up 25 basis points each in the third and the fourth quarter of 2014, the chief strategist said, adding that the won-dollar exchange rate is expected to near 1,100 won per dollar.

Woes over the U.S. easy money tapering will not have a significant negative impact on the Korean economy, he noted, citing Korea’s low foreign investment compared to other Asian emerging economies.

Domestic consumption is expected to grow slightly as the governmental housing policies pull up real estate prices. But failure to implement some economic plans in time may pose additional risks, Kwon suggested.

Kwon had a positive outlook on shares in auto, electronics and shipbuilding, which are closely linked to the global economy, but remained pessimistic about shares in food, telecommunications and electricity.

By Chung Joo-won (joowonc@heraldcorp.com)