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Korea govt targets 2017 GDP growth of 2.6% and inflation of 1.6%

2017 GDP growth,South Korean government

Humbled by deteriorating conditions at home and abroad, the South Korean government revised down its outlook for next year’s economy to 2.6 percent from 3.0 percent target in June in line with downgrades by foreign and domestic institutions as the economic slowdown stretches beyond three years at a time the political scene is troubled with impeached president and faster presidential election in 2017. 

In its 2017 economic outline, the Ministry of Strategy and Finance said it has turned more pessimistic about the coming economy due to sluggish domestic demand weighed down by heavy private-sector debt and poor consumer confidence that would worsen from the risk of higher interest rates and oil prices. 

The economy would be underperforming growth potential for the third consecutive year, managing annualized growth of 2.6 percent since 2015. 

Private consumption is expected to add 2.0 percent, slower than 2.4 percent estimated gain in this year due to stagnant income and worsening job security. 

Exports could rebound 2.9 percent after an estimated fall of 6.1 percent this year, thanks to a recovery in chip and display prices. Imports will rise 7.2 percent because of higher oil prices. 

Facility investment is estimated to increase 2.8 percent next year, reversing from 3.3 estimated fall in 2016 due to accelerated investment in the IT sector. 

Construction investment that sustained domestic demand and grew by an estimated 10.8 percent this year would like to slow to 4.0 percent gain in 2017. 

Current-account surplus is estimated at $82 billion, reduced from this year’s $94 billion as imports are expected to exceed exports. 

The job market condition is expected to worsen due to slow economy and corporate restructuring. The government expects the employee number to add 260,000 next year, down from 290,000 this year. 

Inflation is estimated to accelerate to 1.6 percent in 2017 from 1.0 percent this year due to higher oil prices. 

The local markets closing for the year were mostly quite due to mixed signs about the economy. Despite bleaker outlook for the economy, the November industrial data was the best in seven years as the country’s strength in memory chips and IT equipment sector recovered on improving global demand. 

At 2:00 p.m. Thursday, the Korean Composite Stock Price Index remained boxed at 2,024.61, up 0.65 point from the previous session. The Kosdaq was up 1.62 points at 628.89.The U.S. dollar shipped 4.20 won to 1,208.30.

The Original Posted By Cho Si-young and Kim Se-woong/Maeil Business News Korea

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