By Dow Jones Business News,
December 26, 2013, 10:05:00 PM EDT
SEOUL--South Korea trimmed its growth forecast for next year while maintaining the economy will likely continue to
pick up with fiscal spending at home and an international recovery.
The 2014 growth forecast was lowered to 3.9% from a June projection of 4.0%, the Ministry of Strategy and Finance said
in a biannual economic outlook.
The budget in September also projected 3.9% growth next year.
The estimate for growth this year was revised up to 2.8% from 2.7% in June. The economy grew 2% last year.
"The economic recovery will likely continue after an upper-3% [on-year] growth in the fourth quarter of this year,"
the ministry said in the outlook. Growth is expected to be led by government spending in the first half of next year and
international recovery in the second.
Uncertain U.S. fiscal policy, U.S. Federal Reserve bond buying, a subsequent slowing in emerging economies and
volatile capital flows may hamper growth, however, the ministry said.
Consumer prices are expected to rise 2.3% in 2014--slower than its June forecast of 2.8% but faster than this year's
estimated 1.3%. Inflationary pressure comes largely from expectations of economic recovery, the ministry said. This
year's lower comparison base and the end of child-care subsidies next year may help boost headline inflation. It is
still below the central bank's target of 2.5%-3.5%.
South Korea's current account surplus for 2014 is likely to rise to $49 billion from its June forecast of $30 billion,
the ministry said. The 2013 surplus will likely reach $70 billion.
As many as 450,000 new jobs will be added in 2014--fewer than the 480,000 projected in June, the ministry said. IN all
of 2013 380,000 jobs were likely to have been created.
Write to Kwanwoo Jun at firstname.lastname@example.org
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