Gov't Lowers Next Year's Growth Outlook to 2.6% from 3%

Write : 2016-12-29 08:57:39 Update : 2016-12-29 15:44:30

Gov't Lowers Next Year's Growth Outlook to 2.6% from 3%

Anchor: The government has revised down its economic growth forecast for next year from three percent to two-point-six percent. It marked the first time the government forecast yearly growth in the two-percent range since 1999 after the Asian financial crisis. The government also allocated an additional 20-trillion won stimulus package apart from the national budget to ride out the downturn.
Mina Cha has more.

Report: The South Korean government has lowered next year's economic growth outlook to two-point-six percent from three percent predicted in June.

The forecast came during an economic-related ministers’ meeting presided over by Acting President Hwang Kyo-ahn on Thursday.

It is the first time the government predicted an annual growth less than three percent since 1999 when the country was reeling in the aftermath of the Asian financial crisis.

The government said it was slashing next year’s growth outlook primarily due to sluggish domestic demand, adding it will likely further worsen in 2017.

The government said the country’s exports will improve due to a recovery of global trade as well as improved market conditions for many of South Korea’s main export items. However, it said it will be only a modest improvement due to a slowing Chinese economy and growing trade protectionism around the world.

The government said domestic demand will also improve in the first half of next year from the fourth quarter, driven by the government’s active fiscal policy measures. It, however, cautioned that the recovery can be obstructed by uncertainties surrounding economic policies under the new U.S. administration.

The government’s projection of a two-point-six percent growth, which will extend the country's two-percent-range growth to three years, is adding to concerns that the country is mired in a low-growth trap. The Korean economy grew two-point-six percent for the second consecutive year in 2016.

It will also be the fifth straight year posting growth in the two-percent-range since 2012, except for in 2014 when three-point-three percent growth was posted.

In order to help boost the economy, the government plans to frontload a record high amount of the national budget in the first quarter. Apart from the unprecedented 400 trillion-won budget, it plans to inject an additional stimulus package of more than 20 trillion won into the economy early next year.

Noting that the country’s structural problems, such as the declining work population and weakening competitive edges of backbone industries, will restrict consumption, investment and exports, the government said it will implement more proactive economic policies so that the slow growth in this year's fourth quarter will not continue.

Meanwhile, the government has also lowered its prediction of the level of the employment next year to 260-thousand, while predicting that consumer prices will rise one-point-six percent next year. 
Mina Cha, KBS World Radio News.

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