South Korea’s real economic growth rate is expected to hover below the country’s growth potential in 2012 due to the global economic slowdown, private think tanks said Wednesday.
According to the Samsung Economic Research Institute), the nation’s inflation-adjusted growth rate for next year is estimated at 3.6 percent, compared with an estimated 3.8-percent growth potential.
The country’s gross domestic product gap, the difference between actual GDP and potential GDP, or the maximum possible growth rate at which an economy can grow without triggering inflation, as a result, will reach minus 7.7 trillion won ($6.73 billion) next year from this year’s minus 5.9 trillion won.
“That means the Korean economy is shrinking amid slowing overseas demand and still weak demand,” said the research institute.
The LG Economic Research Institute also said the GDP gap will expand further next year.
“Next year’s real economic growth rate will be below 4 percent, but the potential GDP rate may top the figure,” said Lee Keun-tae, a researcher at the LGERI.
Earlier, the country’s finance minister said the government may consider lowering its forecast of the economy’s growth rate for next year due to persistent downside risks. The finance ministry had predicted that the economy would likely grow 4.8 percent in 2012. The ministry projected a 4.5 percent growth rate for this year.
The think tanks said the widening GDP gap would prod the Bank of Korea to delay its moves for rate hikes.
The central bank froze the benchmark rate at 3.25 percent in October for the fourth straight month as signs of the slowing global economy and eurozone debt crisis outweighed persisting inflation woes.
“The overall economic activities, including private spending, are expected to remain weak next year,” said Lim Hee-jeong, a researcher at Hyundai Research Institute. “It would be hard for the central bank to take actions rate hikes.”
