Dismal Forecast for Job Growth
The Bank of Korea has lowered its economic growth forecast for South Korea again. According to the central bank, the South Korean economy is likely to show the lowest growth rate in six years and the lowest employment growth in nine years this year.
On Oct. 18, the central bank lowered its forecast for this year and next year from 2.9% to 2.7% and from 2.8% to 2.7%, respectively. Three months ago, the bank had lowered the former figure from 3.0% to 2.9%.
“Export and consumption are likely to be smooth unlike investment,” the bank explained, adding, “Facility investment, which was predicted to increase by 1.2%, is likely to fall by 0.3%, 2.5% in the second half of this year alone.” It went on to say that the IT and manufacturing sectors are likely to be sluggish as in the case of automobile and steel.
Construction investment is predicted to show a negative growth of 4.3% in the second half and 2.3% in 2018 as a whole. Likewise, the estimated growth of investment in intellectual property products has been lowered from 2.7% to 2.5%. Next year, facility investment and construction investment are likely to increase 2.5% and decrease 2.5%, respectively. In addition, this year’s imports, private consumption and exports are expected to increase 2.1%, 2.7% and 3.5% with inflation maintained at 1.6%. This year’s current account surplus is estimated at US$70 billion. South Korea’s export growth is forecast to fall to 3.2% in 2019.
In the meantime, the central bank’s employment growth forecast for this year has been drastically lowered. Specifically, the estimated increase fell from 300,000 to 260,000 persons between January and April this year, and then to 180,000 in July and 90,000 this month. The estimate for next year has been adjusted from 240,000 to 160,000, too.
That day, the central bank froze the key rate at 1.5% in view of uncertainties such as the ongoing trade disputes between the United States and China, adverse employment conditions, the current economic recession, etc.