Growth Forecasts Shrink as Exports Fizzle

      November 11, 2022 10:04

      The state-run Korea Development Institute on Thursday slashed its economic growth forecast for Korea next year from 2.3 percent to 1.8 percent due to "slowed export growth and lackluster investments." 
      The only other times growth fell below two percent were in 2020, at the height of the coronavirus pandemic, the global financial crisis in 2008, the Asian financial crisis in 1997 and the second oil shock in 1980.
      Other analysts are also cutting their projections. The state-run Korea Institute of Finance expects Korea's economy to grow just 1.7 percent next year, the government still predicts 2.5 percent growth, and the Bank of Korea forecasts 2.1 percent.
      Inflation is projected at 3.2 percent, lower than this year's five percent as global oil prices stabilize. The KDI forecast that the price of Dubai crude oil will fall from US$98 a barrel this year to $84. 
      "Concerns are growing over an economic slowdown, and interest rate hikes must be controlled," the institute said. "Korea's monetary policy should focus on domestic consumer prices and economic conditions. A rapid interest rate hike as in the U.S. and eurozone is not required." 
      It warned that more rapid interest rate hikes could pressure the corporate bond market further, stunt growth and weaken the Korean won against the dollar. 
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