South Korea is unlikely to reach its 2014 growth objective as domestic demand remains weak and there are few signs that the growth rate will pick up sharply during the rest of the year, experts said Thursday.
In July, the government revised down its growth estimate for 2014 to 3.7 percent from the 4.1 percent that it projected in December last year, citing the latest worsening economic and market situations.
The downgraded projection is still above what major think tanks at home and abroad forecast for Asia's fourth-largest economy.
Hyundai Research Institute expected the economy to expand 3.6 percent this year, while Korea Economic Research Institute predicted 3.6 percent growth.
Woori Finance Research Institute and the Organization for Economic Cooperation and Development presented a similar picture, each forecasting 3.5 percent growth.
The state-run Korea Development Institute is among a few think tanks that presented a similar growth outlook as the government, but observers said that it could also downgrade the estimate sooner or later.
The bleak outlooks are in part based on worries that domestic demand, including consumption, shows few signs of a strong rebound following April's ferry accident that left about 300 people dead.
"Though the government has unveiled diverse stimulus measures aimed at boosting investment and home transactions to name a few, they seem to be having little impact as the overall consumer and market sentiment remains frozen," said Lim Hee-jung, a senior economist at the Hyundai Research Institute.
"Consumers remain still reluctant to spend and companies are not optimistic enough to push for investment. Exports are not strong enough either to prop up the overall economic growth. It will not be easy for the government to attain its growth outlook."
Given recent growth figures, it seems to be unrealistic for the government to beat its own growth target.
Korea's gross domestic product expanded 0.9 percent on-quarter in the first quarter. The growth rates for the second and third quarters stood at 0.5 percent and 0.9 percent, respectively.
For the government to achieve its 3.7 percent target, the on-quarter growth in the last three months should be around 1.2 percent, a threshold that the country has not achieved since the second quarter of 2010.
Outlooks for next year are no less pessimistic. Experts cite the insufficient recovery pace in domestic demand, the U.S.
decision to end its stimulus measures, the weakening yen and the slowing growth in China as major factors that could dim the prospect of the Korean economy in 2015.
Finance Minister Choi Kyung-hwan earlier said, "External risks are mounting," calling for the need to prepare necessary countermeasures. (Yonhap)
