World Economy

S. Korea Growth Forecast Cut

S. Korea Growth Forecast CutS. Korea Growth Forecast Cut

A major South Korean think tank on Wednesday projected Asia’s fourth-largest economy to grow 2.8% this year, down from its earlier forecast of 3.7%, citing the stuttering economy from a slump in exports and the unexpected outbreak of Middle East Respiratory Syndrome. Exports, the country’s key growth engine, were forecast to grow 2.3%, slowing from a 2.8% increase in 2014, as unfavorable currency circumstances and weakening growth in China offset economic recovery in advanced economies, according to the Korea Institute of Finance, Yonhap reported. The think tank forecast facility investment growth to slow to 4.4% from last year’s 5.8% gain as companies scale back capital spending amid sluggish exports and weak investment sentiment. KIF projected private spending to slightly pick up to 25, from 1.8% last year, on the back of recovering consumer sentiment thanks to a boost from gains in the local stock and property markets. The think tank, however, pointed out that growth will be strained by structural factors, as households cut back spending due to the growing household debt and uncertainties over life after retirement.