South Korea’s economy is forecast to continue to expand 3 percent on-year in 2018 on growing exports, investment and private consumption, a private think tank said Wednesday.
Asia’s fourth-largest economy is likely to achieve the growth rate in the coming year following a 3.2 percent on-year expansion this year, according to the Woori Finance Research Institute affiliated with Woori Bank.
“Private consumption is expected to be better in 2018 than this year, and growth of exports and investment are likely to remain good,” it said in a research note.
Consumer spending is projected to climb 2.8 percent on-year in 2018 thanks to a government policy drive to increase household income, compared with a 2.3 percent gain this year.
Buoyed by a global economic recovery and a rise in demand for tech products, overseas shipments of South Korean goods are predicted to 8.9 percent next year from 2017, with corporate capital spending likely to swell 7.6 percent.
Growth of construction investment, however, is forecast to slow to 3.8 percent in 2018 from 8.3 percent this year.
“Exports and fixed investment are expected to see their growth paces slow next year but not enough to compromise the overall recovery trend,” the think tank said. “Yet exports are likely to increase at a double-digit rate until the first half of 2018.”
The institute warned that in the coming year, the South Korean economy will face such risk factors as the increasing volatility of the local financial market stemming from changes in major economies’ monetary policies and geopolitical risk involving North Korea.
But the risk from a Sino-Korean showdown over the deployment of an advanced US missile defense shield here is projected to ease next year. In early November, Seoul and Beijing agreed to put bilateral ties back on track, setting aside their bitter row over the installation of a Terminal High Altitude Area Defense battery in southeastern South Korea.
The government, meanwhile, expects the economy to expand 3 percent on-year in 2018, while the Bank of Korea forecasting a 2.9 percent expansion. The International Monetary Fund and the Organization for Economic Cooperation and Development have also projected the economy to grow around 3 percent next year.
For this year, the Woori Finance Research Institute said economic growth will likely gather ground thanks to the effect of an 11 trillion-won ($10.2 billion) extra budget bill and improving consumer spending in the second half. (Yonhap)