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OECD cuts 2013 growth outlook for S. Korea to 2.6 pct

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(Globalpost/GlobalPost)

SEJONG, May 29 (Yonhap) -- South Korea's economy is expected to grow 2.6 percent this year, an international organization forecast Wednesday, revising down its outlook amid the prolonged uncertainties at home and abroad.

The growth estimate by the Organization for Economic Cooperation and Development (OECD) is lower than 3.1 percent predicted in November last year. It is the same as the Seoul government's extra budget-reflected growth outlook.

The OECD also cut its growth estimate for South Korea next year from 4.4 percent to 4 percent.

"The economy faces both external and domestic risks. With exports accounting for more than half of GDP, Korea is particularly exposed to global economic conditions and exchange rate shifts," the OECD said in a report.

The revision is the latest in a series of growth downgrades for Asia's fourth-largest economy. Recently, the state-run think tank Korea Development Institute lowered its growth projection from 3 percent to 2.6 percent.

In late March, the Seoul government also revised down its projection from 3 percent to 2.3 percent in the face of toughened economic conditions.

The government later said that the economy could grow 2.6 percent this year if it takes into consideration the intended impact of the recently-unveiled 17.3 trillion won (US$15.3 billion) extra budget.

The OECD forecast that the South Korean economy will likely make a "gradual" recovery in 2013-14 following a slump in 2012 when it grew just 2 percent from a year earlier.

Global economic situations were still cited as a major risk factor confronting the export-driven South Korean economy.

High household debt was also cited as another burden that could weigh on the economy as it could undercut spending in the private sector.

The OECD cut its growth outlook for the global economy from 3.4 percent to 3.1 percent.

The Paris-based organization, however, sounded an optimistic note, saying that South Korea's "strong" fiscal position and inflation rate that stays below the target gives its government a fiscal and monetary capacity to act on in the case of the prolonged slowing global economic growth.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/130529/oecd-cuts-2013-growth-outlook-s-korea-26-pct