Thursday, August 16, 2018
Experts Lower Korea's Annual Growth Estimate to 2.8%
Amid Rising Unemployment Rate
Experts Lower Korea's Annual Growth Estimate to 2.8%
  • By Jung Suk-yee
  • August 8, 2018, 12:00
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Korean economists forecast that the Korean economy would grow 2.8% in 2018.
Korean economists forecast that the Korean economy would grow 2.8% in 2018.

Experts on the Korean economy forecast that the Korean economy would grow 0.1 percentage point less than the government's target of 2.9 percent. The Korea Development Institute (KDI) said that the economy's growth momentum has weakened, limiting an economic recovery overall.

According to a survey in the August issue of the KDI Economic Trends published by the KDI on August 7, 20 Korean economists forecast that the Korean economy would grow 2.8% in 2018.

According to the survey, the experts said that sluggish economic indicators would slow down the growth of the Korean economy.


They predicted that Korea’s exports would grow 5% to 6% this year and next year, forecasting that global trade volume would decline due to the spread of protectionism.

In particular, they projected that the unemployment rate would rise to the second half of the 3% level and the growth of the number of employed people would slow down significantly. In the same vein, the government lowered the expected growth of the number of employed people to 180,000 from 320,000 suggested by the government early this year. According to them, the growth of consumer prices will belong to the mid- to late-1% level. Many experts forecast that a benchmark interest rate hike was highly likely to be delayed to the fourth quarter, and a slight rise in the rate next year, KDI added.

“Korea’s exports are maintaining relatively strong growth with semiconductors taking the lead but domestic demand somewhat weakened as the consumption recovery trend has slowed down amid continued sluggish investment among others, the KDI said in the August issue.

Industrial production in June remained flat (0.0%). It fell from the previous month when industrial production climbed 1.6%. In the mining and manufacturing industry, semiconductor production increased 24.9%, but production by the mining and manufacturing industry fell 0.4% from the previous month due to slumps in the auto and machine equipment industries. June shipments by the manufacturing industry switched to a 2.1% drop from a 1.2% increase in the previous month. The manufacturing industry’s inventory rate rose to 111.5% due to an increase in inventories mainly in chemical product, telecom and broadcasting equipment inventories. "Even by applying situations on the demand side, the economic improvement trend on the production side excluding some industries such as the semiconductor industry is weakening," the KDI emphasized.

In addition, with durable goods taking the lead, the June retail sales index hit 4.0%, down from 4.5% recorded last month. In July, the consumer sentiment index dropped to 101.0 from 105.5 in June. Exports rose 6.2% mainly thanks to semiconductor exports in July but the KDI warned about continuing downside risks such as the US-China trade war.