The Korea Herald


Korea's economy may achieve 3% growth in 2018: poll

By Yonhap

Published : Dec. 25, 2017 - 11:29

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South Korea's economy may be able to pull off 3 percent growth in 2018, although numbers may dip slightly from this year, a poll conducted on head of local think tanks predicted Monday.

The six research institute chiefs said in the survey carried out by Yonhap News Agency, said exports that have fueled growth in

2017 will likely trail off with facility investment and the construction sector also holding back the economy.

New jobs to be created in the new year could reach around 300,000, which is a respectable number although smaller than gains expected for this year.

For this year, the government is expecting Asia's fourth-largest economy to grow by more than 3 percent, mainly helped by surge in outbound shipments.

The findings showed heads of the Korea Development Institute (KDI), the Korea Institute for Industrial Economics and Trade (KIET), the Korea Institute for International Economic Policy and three other thinks tanks expected the gross domestic product to move up 2.8-3 percent in the new year, down from, 3.1-3.2 percent for 2017.

Hyundai Research Institute (HRI) chief Lee Dong-geun said that exports will continue to do well, fueled by global economic recovery, but the pace of growth will decrease vis-a-vis this year.

"The construction sector may take a hit with private consumption and facility investment only posting modest gains," Lee said.

Think tank presidents said that while exports probably expanded

13 percent in terms of customs clearance, this year, numbers will fall to the 3-6 percent range in 2018, mainly due to weaker demand for non-semiconductor products like steel.

They said facility investment growth will hover around the 3 percent level, while the construction sector may experience minus growth or post only marginal gains that can restrict growth in the new year.

On the positive side, the survey showed economists forecasting gains in private spending that can generate domestic demand.

KDI President Kim Joon-kyung said the Moon Jae-in government's plan to increase income for workers will likely have a beneficial impact on spending in the new year.

He, however, cautioned that most companies may not make big investments in their facilities with the government decision to hold off on injecting more money into social overhead capital projects to limit gains.

On employment, the heads of economic institutes said people getting hired will dip from around 330,000 projected for 2017.

They said this is due to growth being centered on information technology areas that do not contribute a lot to employment.

Senior researcher said that state policy to improve employment opportunities could offset weaker demand in the private sector, which will bolster the job market.

Yu Byoung-gyu, head of KIET, said state support will help overall conditions compared to this year, although warning that ongoing restructuring efforts in the shipbuilding and shipping lines may limit real improvements. (Yonhap)