State-run think tank Korea Development Institute (KDI) on Tuesday revised up the nation’s economic growth forecast for this year to 2.6 percent from 2.4 percent estimated three months earlier upon rebound in exports and investment.
The KDI announced that it raised its growth forecast to 2.6 percent, up 0.2 percentage points from 2.4 percent estimated in December last year. The improved outlook is in line with others - the South Korean government, Bank of Korea, and International Monetary Fund in their estimates of 2.6 percent for this year.
Private think tanks are less optimistic. The Korea Economic Research Institute predicts 2.5 percent growth, Hyundai Research Institute 2.3 percent, and LG Economic Research Institute 2.2 percent.
Last year, Korea’s economy expanded 2.8 percent.
KDI gave better growth outlook upon improvements in exports and investment. The policy institute forecast Korea’s total exports to increase 4 percent this year and commodity shipments 4.9 percent on year. In December, it estimated 1.9 percent growth in total exports and 1.5 percent in merchandise exports.
Imports are expected to grow 5.5 percent instead of last estimated 3.4 percent. Outlook for merchandise imports was raised to 6.2 percent growth from 2.2 percent.
It bumped up capital investment outlook to 4.3 percent from 2.9 percent, and 6.4 percent from 4.4 percent in construction investment. Fixed investment growth outlook for this year as result has been raised from 3.6 percent in December to 5.1 percent.
Consumer spending, however, will remain lethargic this year as well.
The institute cut estimate for total consumption growth to 2.2 percent from earlier 2.3 percent. Its outlook on private spending has been left unchanged at 2 percent.
This year’s current account surplus is estimated at $89.4 billion, down from last year’s $98.7 billion as imports gain faster than exports due to higher oil prices.
The KDI raised its consumer price outlook for this year to 1.8 percent from 1.3 percent estimated three months earlier, citing supply factors such as a rise in international oil prices. The think tank raised its 2017 forecast for the country’s unemployment rate to 3.8 percent from an earlier estimate of 3.7 percent.
By Kim Se-woong and Cho Si-young
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Source: Pulse by Maeil Business News Korea (Apr. 18, 2017)