South Korea‘s economy will likely grow 3.4 percent in 2012, down from 3.8 percent growth projected for this year, as global economic uncertainties affect exports, a private think tank said Tuesday.

In its outlook for next year, LG Economic Research Institute said sluggish growth in industrialized economies is expected to hurt demand for durable goods and related parts. Such developments can directly impact the country’s outbound shipments.

The institute said there may be some improvements in domestic consumption, but not enough to make up for losses from weak exports.

The growth forecast is below the government‘s growth target of 3.7 percent for the new year.

Food and commodities prices are expected stabilize to help contain inflationary pressure, but there may by no real gain in consumer buying power because of unfavorable job market conditions, it said.

Next year may see some 260,000 new jobs created overall, down from around 400,000 forecast for 2011.

The LGERI added that inflation may fall to the lower 3 percent range in the new year from around 4 percent in 2011.

“Corporate sales and earnings will likely fall next year and that can pose challenges for less competitive companies,” a researcher said. “The slowdown in the economy could spill over into the financial sector that loaned money to companies and households.” 

(Yonhap News)