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Think tank revises up 2017 growth forecast for Korean economy to 2.8%

A state-run think tank on Tuesday revised up its 2017 growth forecast for the South Korean economy by 0.3 percentage point to 2.8 percent on the strength of global trade and eased uncertainties at home and abroad.

"The South Korean economy will likely see the upbeat pace of its exports and investment slow down to some extent, but private consumption should make a slight upturn in the second half," the Korea Institute for Industrial Economics and Trade said in a report. It said such developments can help the economy to expand at a faster pace than previously anticipated in 2017.


In its earlier forecast released in November, KIET had expected Asia's fourth largest economy to pull off 2.5 percent growth this year.

KIET also predicted that exports, the country's key economic driver, will rise 11.1 percent this year on the back greater world trade, logging the first double-digit growth in six years. The country's imports is forecast to jump a sharp 15.2 percent on-year in 2017, with trade surplus falling to $82.7 billion from $89.4 the previous year.

Private consumption is expected to gain 2.2 percent as economic recovery and stimulus measures being pursued by the new Moon Jae-in government will likely boost consumer sentiment. But stagnant household income and rising borrowing costs may offset such positive changes, the KIET report said.

Facility investment will rise some 7.3 percent in 2017, a sharp turnaround from a 2.3 percent drop a year earlier on the back of brisk overseas sales of locally made products, while construction investment will slow down to 5 percent from last year's 10.7 percent amid a cool-down in a real estate boom.

The think tank said South Korea's key export items, such as semiconductors and steel, will bask in booming global demand and rising prices, but spreading trade protectionism is expected to put more pressure on the country's exporters. (Yonhap)

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