'GDP of Korea Likely to Show Little Growth This Year'

An increasing number of organizations are estimating Korea’s GDP growth rate for this year at slightly over 2 percent, much more pessimistic than the Korean government’s 3.1 percent estimate and that of the Bank of Korea at 2.8 percent.

Morgan Stanley, Moody’s Investors Service, and Commerzbank recently predicted that the rate would end up at 2.3 percent this year to reach the lowest level since 2007, when it dipped to 0.7 percent. Nomura Securities, IHS Economics, ANZ Bank, and Wells Fargo mentioned 2.2 percent, 0.1 percentage points lower than that of 2012. All in all, the average estimate of 36 foreign financial institutions is 2.5 percent. Investment banks have lowered their estimates all the way from 3.5 percent since the beginning of this year.

In the meantime, the LG Economic Research Institute recently said that Korea is likely to record an annual average of 1.7 percent in potential growth between 2020 and 2030. “The potential growth rate fell from 4.6 percent to 3.6 percent between the 2000s and the 2010 to 2014 period, and the estimate for 2015 to 2019 is 2.5 percent,” it remarked, adding, “The amount of working-age population is likely to decrease from 2017, accelerating the downturn in the potential growth rate.”

The Hyundai Research Institute warned that the potential growth rate might dip below 2 percent in the near future, too. “After having reached a peak of 10 percent in the 1970s, it plunged to 3.5 percent in the period of 2010 to 2014,” it explained, continuing, “The current rate is around 2 percent, but it might decline further with time.”