Declining Economy
Korea is predicted to record an annual economic growth rate of less than 3 percent this year amid the repercussions of the Middle East Respiratory Syndrome (MERS) and slowdown of the Chinese economy. Specifically, the Bank of Korea’s estimate is 2.7 percent and those of LG Economic and Hyundai Research Institutes are 2.6 percent and 2.4 percent, respectively. It is 2.7 percent for each of the OECD and the IMF.
Standard & Poor’s, in the meantime, recently said that Korea’s GNI per capita is likely to fall from US$28,101 to about US$27,000 between 2014 and 2015. The amount remains stuck between US$20,000 and US$30,000 for the 10th consecutive year. Korea’s exports are likely to show a negative growth for the first time in three years, too.
The country is forecast to show an increase in consumption of less than 2 percent this year due to the impact of the MERS and snowballing household debts. In the third quarter, the private consumption growth stood at no more than 1.1 percent in spite of the government’s aggressive measures such as a supplementary budget and individual consumption tax cut. The private consumption growth remained at less than 2 percent in 2012, 2013 and 2014.
This year’s consumer price increase is expected to hit a record low. The consumer price index edged up 0.6 percent for the first 10 months of this year. The Bank of Korea’s estimate for this year as a whole is 0.7 percent.