South Korea slashes 2013 growth outlook

Last Updated: Thu, Dec 27, 2012 06:00 hrs

Seoul, Dec 27 (IANS) South Korea's finance ministry slashed its 2013 growth outlook for the country to 3 percent from an earlier estimate of 4 percent Thursday, citing external uncertainties such as the US fiscal cliff issue and the eurozone fiscal crisis.

The country's real gross domestic product (GDP) was forecast to expand at an annual rate of 3 percent in 2013, revised down from a 4 percent growth estimated six months earlier, according to the Ministry of Strategy and Finance.

The growth outlook for 2012 was cut to 2.1 percent from an initial estimate of 3.3 percent, reported Xinhua.

The downward revision was in line with the global trend. The International Monetary Fund downgraded its growth forecast for the global economy to 3.3 percent for 2012 and 3.6 percent for 2013 each in early October from the July projections of 3.5 percent and 3.9 percent respectively.

Reflecting the dimmer global outlook, the Organization for economic Cooperation and Development slashed its 2013 growth outlook for South Korea to 3.1 percent in late November from a prior estimate of 4 percent. Bank of Korea, South Korea's central bank, expected the economy to grow at an annual rate of 3.2 percent next year.

The finance ministry cited the persistent external uncertainties as the reason for the downward revision.

"In the first half of 2013, our economy would grow at a modest pace due to lasting uncertainties related to the US fiscal cliff and the eurozone fiscal crisis," the ministry said in a press release.

The ministry forecast the South Korean economy would improve in the second half amid the modest global recovery and easing external uncertainties, noting that if earlier-than- expected agreement on the US debt talks and significant progress in the eurozone political union should materialize, the economy would recover at a faster pace than predicted.

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