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Macroeconomic indicator - S Korean economy seen growing by 3.5pct on average through 2016
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Saturday, 13 Oct 2012
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Yonhap reported that South Korea's economy is expected to grow at an annual rate of 3.5% on average through 2016, but its growth may slow if the euro zone crisis further protracts.

According to the report compiled by the National Assembly Budget Office, Asia's fourth largest economy is forecast to grow 2.5% in 2012 before its growth rate accelerates to 3.5% in 2013 and 4.3% in 2014.

The report showed that the country's economic growth is estimated at 3.9% and 3.4%, respectively, in 2015 and 2016.

The report said that "The economic projection is based on the assumption that the fiscal crisis in Europe would not lead to another slump in the global economy. The re emergence of the European crisis, among other factors, is the largest downside risk to the South Korean economy."

The report said the country's exports would not improve sharply over the mid term due to the ongoing crisis in Europe and slowdowns in China and the United States. Also, waning domestic demand and highly indebted households could pose downside risks to the economy.

The NABO's latest growth projections are in stark contrast with the government's growth targets for the coming years.

The government is expecting the economy to grow 3.3% in 2012 and 4% in 2013. Its growth estimates for 2014, 2015 and 2016 are put at 4.3%, 4.5% and 4.5%, respectively.

The country's policymakers are hoping that the US economy and other major economies such as China would improve gradually down the road, with emerging economies also showing a modest recovery.

According to the report, the NABO also said the country's annual growth potential would reach 3.7% through 2016, lower than the annual rate of 4.4% posted in the 2004-2007 period. The figure also compares with the annual rate of 3.9% seen in the 2007-2011 period.

Source - Yonhap News

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