Gov’t falls in line with slower growth forecasts

The government is likely to cut its 2013 estimate for economic growth to the 3 percent range as downside risks at home and abroad will weigh on the economy, officials said yesterday.

The government forecast earlier that Asia’s fourth-largest economy would grow 4 percent next year, much rosier than outlooks presented by the central bank and private think tanks.

“I think we have to consider the weak growth in the third quarter [in adjusting the growth forecast]. The government is taking into account a set of downside risks,” said a senior official at the Ministry of Strategy and Finance.

The central bank and international organizations set their growth estimate at the 3 percent range with foreign investment banks suggesting 2 percent. The Bank of Korea’s 2013 growth projection was lowered to 3.2 percent and the state-run Korea Development Institute forecast the economy would expand by 3 percent next year.

The bleak outlook came as Korea grew a mere 0.1 percent in the third quarter from three months earlier, the weakest growth since the first quarter of 2009, due to faltering facility investment.

Downside risks from around the world continue to weigh on the export-dependent economy. Despite some positive signs of recovery in consumption and employment in the U.S., stalled talks over a U.S. fiscal cliff are casting a cloud over the global economic outlook.

“The local economy is likely to improve next year but growth will hinge on how much it can rebound in the second half,” said an official at the ministry.

The government tentatively set Dec. 27 as the date it will announce its 2013 economic management plan, just over a week after the Dec. 19 presidential election.

Yonhap