Korea’s economy will expand 2-point-2 percent next year amid rebounding exports but fiscal prudence is essential to ensure overall stability.
Now this is according to the Korea Development Institute.
our Ahn Sung-jin covers its outlook.
The nation’s economic think tank, the Korea Development Institute, has forecast South Korea’s GDP to grow by 2-point-2 percent in 2024.
That is a point-8 percentage point increase from 2023’s expected economic growth.
The report released on Thursday noted that the expected increase in economic growth is largely attributed to a base effect caused by the low growth this year as well as a recovery in exports.
The KDI releases its annual economic outlook reports in May and November, though this year it published two additional forecasts in February and August to reflect the rapidly changing economic conditions.
Forecasts for consumer inflation increased by point-1 percentage point from August’s forecasts for both 2023 and 2024.
November’s report showed a rise in expected consumer inflation.
It also showed a slowdown in domestic demand as high interest rates hit spending and infrastructure investment.
“High interest rates tend to have a greater negative impact on goods consumption and this is showing in the recent Korean economy. Despite this, the semiconductor industry, which accounts for a high proportion of Korea’s exports, is recovering from the economic downturn, gradually pulling up the overall economic trend.”
The think tank suggested that it would be necessary to tighten fiscal policies to ensure price stability while emphasizing long-term financial stability and managing the impact of South Korea’s aging society.
“There is a need to promote structural reform throughout the economy to cater to rapid demographic changes and intensifying global market competition with technological advancements in countries such as China.”
However, the report also warned of a potential delay in the economic recovery as global oil prices may surge amid the conflict between Israel and Hamas.
It also noted that if China’s real estate market plummets, hindering its financial stability, this may lead to decreased investment in Korea.
Ahn Sung-jin, Arirang News.
source : https://www.arirang.com/news/view?id=261502
