S. Korean economy to grow 2.8% in 2022: think tank

(123rf)

The South Korean economy is likely to lose its upward momentum and grow less than 3 percent in 2020 amid slowing exports and waning pandemic-related stimulus, a private think tank said Thursday.

The Hana Institute of Finance predicted Asia's fourth-largest economy to expand 2.8 percent next year, down from this year's growth estimate of 3.9 percent.

"The Korean economy is expected to post solid growth on strong domestic demand stemming from looser social distancing measures," said the institute affiliated with major bank holding firm Hana Financial Group.

Yet the economy's growth momentum is predicted to gradually weaken due to an expected slowdown in exports and a reduction in pandemic-related government stimulus spending it added.

South Korea's private consumption is projected to increase 3.3 percent next year, up from a 3.1 percent gain for this year.

The growth rate of construction investment is forecast to rise to 2.7 percent in the coming year from 0.6 percent in 2021.

Corporate capital spending is predicted to expand 3 percent in 2022, down from a 9.3 percent surge forecast for this year.

South Korea's exports are expected to climb 2 percent on-year in the new year, down sharply from an estimated 22.2 percent jump for this year, due mainly to the disappearance of the so-called base effect.

South Korea's current account surplus is anticipated to dwindle to US$68.5 billion next year from a surplus of $81.5 billion for this year.

The think tank also expected the Bank of Korea, the country's central bank, to conduct two rate hikes in the fourth quarter of this year and the third quarter of 2022 each, raising the benchmark interest rate to a pre-pandemic level of 1.25 percent. (Yonhap)