Korea's economy forecast to expand: OECD data

By 정주원
  • Published : Jun 23, 2014 - 09:47
  • Updated : Jun 23, 2014 - 09:47
South Korea's economy is expected to grow in the coming months, although there are still lingering uncertainties related to domestic demand and the stronger local currency, data showed Monday.

According to the Organization for Economic Cooperation and Development, the composite leading index of economic activity for South Korea stood at 101.01 in April, slightly down from the previous month's 101.02.

This marked the 15th consecutive month that the index holds above the benchmark 100.

The CLI is an indicator of how the economy will fare four to six months ahead by measuring industrial output, gross domestic product and housing and financial market conditions. A reading above 100 means the economy is expected to expand.

The April index for Asia's fourth-largest economy is higher than the OECD average of 100.60, which is up from the previous month's 100.58.

South Korea's CLI for April ranked 12th among the OECD's 33 member countries.

The South Korean economy grew 3.9 percent on-year in the first quarter, quickening from a 3.7 percent growth three months earlier as demand for tech and petrochemical products rose in Europe and the U.S.

The country's central bank predicts the local economy to grow 4 percent this year and 4.2 percent next year.

"Despite the U.S. Fed's tapering, South Korea managed to post a higher CLI," said Lee Ha-yeon, an analyst at Daishin Securities.

"But we cannot rule out the possibility of the CLI waning as recent data show signs of a slowdown in domestic demand."

Uncertainties over outbound shipments and domestic demand still linger as a strong local currency may wreak havoc on exports and the mourning for the recent ferry disaster which killed some 300 people aboard is feared to sap private spending.

The country's exports fell 0.9 percent in May from a year earlier, and the strong won could have an impact on exports with a time lag of six months, they said. Domestic demand is shaky, particularly after the April 16 ferry accident. (Yonhap)