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Economic growth projections for 2020 vary widely

Government is ‘relatively’ optimistic despite overwhelmingly dismal signals

As South Korea’s central bank is slated to announce its revised economic growth outlook later this week, skepticism is mounting given the downbeat economic reality.

While most economists from the private sector and government-related institutions agree that growth will be slow this year -- mostly due to uncertainties from the US-China trade tensions -- they differ on the pace of recovery next year. State-run institutions are relatively optimistic, citing the rebounding momemtun of key industries, but private organizations remained cautious.


The Bank of Korea, which will announce its revised estimates for gross domestic product growth on Thursday, is largely speculated to lower this year’s figure by 0.2-0.3 percentage point.

The central bank has lowered the on-year GDP growth projection three times so far this year -- in January, April, and July -- changing it to 2.2 percent from the initial 2.7 percent.

In the parliamentary audit last month, BOK Gov. Lee Ju-yeol admitted that the economy may not be able to meet the 2 percent growth level this year, hinting at an additional downward revision by the year-end.

The real dilemma for economic policymakers and institutions is the outlook for next year.

Experts suggest that the BOK will not drastically lower its outlook for next year, to avoid further dampening the market.

“(The BOK’s outlook for this year) is likely to stay in line with the government’s forecast (of 2-2.1 percent),” said Lee Mi-seon of Hana Financial Investment.

“As for next year, (policymakers) will likely take into consideration that an excessively low growth outlook may trigger pessimistic market sentiments.”

As the Ministry of Economy and Finance earlier projected a growth pace of 2.2-2.4 percent range for next year, the BOK’s upcoming revision is thus mostly projected to be around 2.3 percent, according to market observers.

Private institutions and global investment banks, on the other hand, suggest that Korea’s growth rate for next year will be in the 1 percent range, or 2.2-2.3 percent at best.

LG Economic Research Institute, which in September had suggested a growth pace of 1.8 percent for next year, is currently working on revising its estimate, gesturing to further lower it.

“As the United States and China are expected to face slower growth next year, it is unlikely that Korea will see its growth pace speed up next year,” NH Investment analyst Ahn Ki-tae also said.

By Bae Hyun-jung (