Global think-tanks and rating companies seem to compete to lower their outlooks for Korea’s economic growth in 2019, prompting doubts whether Asia’s No. 4 economy will be able to grow 2 percent.
The country’s growth rate was expected to go down this year from 2.7 percent in 2018. But the government and most institutes projected that national outputs will increase at least 2.5 percent.
Oxford Economics, a top-tier player in global forecasting and quantitative analysis, started the race to come up with gloomy prospects for gross domestic product (GDP) of Korea Inc. last month.
“We forecast GDP to grow 2.3 percent in 2019,” Oxford Economics senior researcher Tommy Wu said.
“Externally, slowing Chinese and global demand will continue to weigh on Korea’s exports, especially before Chinese growth finds a floor around the second quarter. Demand for semiconductors and petrochemical products is expected to remain weak.”
As Oxford Economics set the tone, Moody’s Investors Service followed suit.
On March 4, 2019, the international rating company revised down its 2019 outlook for Korea to 2.1 percent from 2.3 percent.
“We forecast real GDP growth in South Korea slightly above 2 percent in both 2019 and 2020, markedly lower than the 2.7 percent growth in 2018,” it said in its recent report.
“The weakening of the investment cycle and the deceleration in global trade have hurt economic momentum. Subdued demand for intermediate products from China, especially semiconductors, has had an adverse impact on exports as well as on the investment outlook.”
That means that Korea will record its second performance this year in the 21 century after just 0.7 percent increase in 2009 when the world suffered the global financial crisis and the subsequent credit crunch.
Against this backdrop, some worry that the country might fail to rack up 2 percent in terms of economic growth this year.
“Now, we cannot say for sure that the economic growth would top 2 percent,” said an analyst who asked not to be named. “We should put forth great efforts to boost the lackluster economy.”