Obstacles to Growth
The International Monetary Fund (IMF) pointed out that inactive corporate activities and negative consumer sentiment could remain as obstacles to the growth of the Korean economy. The IMF added that this is why it lowered its GDP growth estimate for Korea from 3.1 percent to 2.7 percent for this year on Oct. 6.
Still, the IMF said on Oct. 10 that Korea’s GDP growth would be able to reach 3.2 percent next year, thanks to a decrease in international commodity prices and the Korean government’s policy for adaptation. Korea recorded a GDP growth rate of 2.3 percent in 2012, 2.9 percent in 2013, and 3.3 percent in 2014.
The IMF explained that many Asian countries are losing their growth potential these days, led by declining demands from the other regions and the subsequent decrease in exports, as well as their high reliance on the Chinese economy that is turning towards the worse as of late. When it comes to the Chinese economy, the organization remarked that the manufacturing sector has reached a plateau, while imports are on the decline due to a decrease in investment. It also said that Japan’s inflation rate could rise to 1.5 percent or so in the mid-term, based on its quantitative easing policy and low international oil prices.