News Room - Business/Economics

Posted on 18 Oct 2007

IMF Sees Korea’s 2008 Growth at 4.6%

The International Monetary Fund (IMF) has raised its forecast for growth of the South Korean economy to 4.6 percent next year from 4.4 percent projected in July. Still, it is far lower than the government's estimate of 5 percent.

 

The country's growth is expected to come in at 4.8 percent this year on growing domestic demand and solid exports, the IMF said in its World Economic Outlook released Wednesday.

 

The global economy would grow 4.8 percent next year, down 0.4 percentage point from this year's 5.2 percent growth rate, it said.

 

South Korea's job market would also improve, with the unemployment rate estimated to fall to 3.1 percent next year from 3.3 percent of 2007. Consumer prices, meanwhile, will slightly move up to 2.7 percent from 2.6 percent this year.

 

It expects the U.S. economic growth to remain below 2 percent next year. It is expected to grow 1.9 percent for two consecutive years from 2007.

``Ongoing difficulties in the subprime mortgage market are expected to extend the decline in residential investment, while house price declines are likely to encourage households to raise their saving rate out of current incomes and thereby dampen consumption spending,'' it said.

 

China, meanwhile, will continue the two-digit growth, with the real GDP estimated to expand 10 percent next year. Its growth rate estimation stands at 11.5 percent for 2007. The inflation rate will fall to 3.9 percent next year from 4.5 percent, according to the IMF.

 

Regarding the Asian economy, it cited slower demand for Asian exports, and electronic goods in particular, and the possibility of further global financial market turbulence as particular downside concerns. ``On the upside, the projected easing of growth in China may not materialize unless the authorities tighten monetary policy more decisively and allow a faster appreciation of the exchange rate.''