Invest KOREA

According to Yonhap News,

(SEJONG = Yonhap News) Korea is expected to experience moderate economic growth in 2014, at an annual growth rate of 3.7 percent, according to the Korea Development Institute (KDI), a national research institute of Korea.

The Organisation for Economic Co-operation and Development (OECD) has forecast that Korea’s economy will post 3.8 percent growth in 2014.

According to KDI’s “Economic Outlook 2013 - 2nd Half,” published Tuesday, the country’s gross domestic product is expected to grow more than 3.7 percent in 2014.

This is lower than the 3.9 percent growth rate forecast by the Korean government and the 3.8 percent forecast by the Bank of Korea. The International Monetary Fund maintains its previous growth outlook of 3.7 percent. Other organizations, including the National Assembly Budget Office, maintained their growth forecast at the mid-3 percent level.

The increase in exports and domestic consumption will lead the recovery of Korea’s economy, which has experienced sluggish conditions since 2012, according to KDI.

KDI expects the Korean economy to record higher year-on-year growth in the first half of 2014 (3.9 percent) and lower year-on-year growth in the second half of next year (3.5 percent) driven by a base effect. The seasonally adjusted rate of increase on-year will remain at a similar level, at 0.9 percent and 0.8 percent in the first and second half of the year, respectively.

Capital investment will reach a surplus, from -2.5 percent in 2013 to 8.4 percent in 2014, while private consumption is expected to reach 3.6 percent, which is higher than the 2.0 percent estimate for this year.Construction investment is predicted to fall to 2.9 percent.

Imports are expected to increase by 6.9 percent and exceed exports (6.6 percent) as domestic consumption gains momentum.

The current account surplus will decrease from USD 69 billion in 2013 to USD 51 billion, while the balance of goods and services is expected to decline to USD 45.8 billion and USD 5.2 billion, respectively.

Consumer prices are expected to rise about 2.0 percent, remaining below the government’s target inflation range.

The unemployment rate is forecast to reach 3.1 percent, while employment figures will increase from 350,000 in 2013 to 400,000 next year.

The Korean economy will show moderate growth, according to KDI, with a growth rate forecast of 2.8 percent, which is 0.1 percent higher than the Korean government’s estimate.

Although the economy is expected to recover in the short term, reduced profitability in the business sector and high household debt may hinder stable long-term growth, according to KDI’s analysis.

The business sector has, in general, seen a drop in profitability in recent years, with the exception of a few large companies, and the number of potential insolvent companies unable to cover interest payments with operating profits is growing as well.

Also on Tuesday, the OECD forecast that Korea’s economy will grow by 3.8 percent next year, which is a slightly adjusted figure from its 4.0 percent forecast in May.

Korea’s current account balance will reach 4.5 percent of its GDP, and private consumption will increase to 3.5 percent, according to the OECD. Consumer prices are likely to remain stable at 1.2 percent in 2013 and 2.1 percent in 2014.

The country’s economy will grow nearly 4.0 percent between 2014 and 2015, according to the OECD.

The OECD gave high marks for Korean government policies that lower interest rates and revise supplementary budgets, the recovery of private and business consumption and better capital inflows compared to those of other emerging nations.