Korea's economy to grow 2.3% in 2017: think tanks

South Korea's major think thanks on Sunday predicted the country's economy may grow in the low 2 percent range next year, citing a global trade slowdown and faltering domestic consumption amid political uncertainties at home.

For 2017, the growth outlook stood at an average 2.3 percent, according to a survey on major private and state-run think tanks and research centers conducted by Yonhap News Agency.

The Korea Development Institute (KDI) forecast that Asia's fourth-largest economy will expand 2.4 percent next year from a year earlier, down from the 3 percent growth it predicted in May.

"Our economy's growth outlook is expected to reach 2.4 percent, below this year estimate," said KDI President Kim Joon-kyung.

"Uncertainties surrounding the United States have expanded, and there is possibility of sluggish domestic consumption."

There have been mounting concerns that US President-elect Donald Trump's looming protectionist policies could curb South Korean exports.

The Korea Institute for International Economic Policy (KIEP) forecast the local economy's recovery momentum will be weakened in the face of still sluggish exports and domestic demand.

"The growth outlook for next is expected to be somewhere around 2.5 percent," said KIEP President Hyun Jeong-take, adding that under the new US administration, the country could raise its key interest rate.

Hyun further forecast that possible trade friction between the United States and China could deal a blow to South Korea's exports.

Trump has said he would instruct his treasury secretary to label China a currency manipulator and order the US trade representative to bring trade cases against China.

KIEP did not elaborate on domestic demand, but the political uproar caused by President Park Geun-hye's impeachment could exert a negative effect on consumption, which could hurt economic growth.

The Korea Institute for Industrial Economics and Trade (KIET) said the South Korean economy will likely expand 2.5 percent next year as a drop in domestic demand and investment will weigh heavily on the local economy. 

"The 2017 economy will grow an estimated 2.5 percent as a slight recovery in exports will be offset by a slowdown in construction investment and private consumption," said KIET President Yoo Byung-kyoo.

The KIET said a boom in the local real estate market led by the Seoul government's deregulation drive has contributed to propping up Asia's fourth-largest economy throughout this year, which has been suffering from faltering exports and flaccid consumption.

Kwon Tae-shin, chairman of the Korea Economic Research Institute, meanwhile, forecast the South Korean economy will grow 2.2 percent annually next year.

The Korean Economic Association also put the 2017 growth outlook at somewhere around 2 percent due to the sluggish consumption.

"Next year will not show an improvement over this year," said Cho Jang-ok, chief of the association, further forecasting that the annual growth could even fall below the 2 percent mark.

 The outlook by local think tanks came after the recent report by the Organization for Economic Cooperation and Development (OECD) indicated slower growth for South Korea in the new year.

The OECD made a downward revision of its 2017 growth forecast for the South Korean economy, lowering it to 2.6 percent from 3 percent, as reduced government spending, which has played a big role in backing the economy throughout this year, will weigh heavily on the economy next year. (Yonhap)