BOK revises down 2012 growth outlook to 3.5 percent

South Korea's central bank on Monday revised down its 2012 economic growth outlook due to deteriorating terms of trade and lowered its inflation projection in anticipation of more stable food and energy prices.

The Bank of Korea (BOK) lowered its growth projection to 3.5 percent for the whole year from an earlier 3.7 percent estimate made in December. The economy will grow 3 percent in the first half but expand 3.9 percent in the July-December period.

"The downward revision reflects unfavorable trade conditions facing the country that have offset improvements in domestic consumption," the central bank said.

Despite the lower growth estimate, facility investment should be buoyed by a build up in the information technology sector with money going into construction to remain unchanged, it said.

Facility investment growth is forecast to reach 6.2 percent in 2012, up from a 4.2 percent gain predicted earlier. Construction investment gains should remain unchanged at 2.6 percent.

The central bank downgraded its inflation forecast to 3.2 from

3.3 percent, citing the nation's core inflation, excluding volatile food and energy prices, will likely dip to 2.6 percent.

The revised 2012 overall inflation prediction is lower than the

4 percent increase tallied by Asia's fourth-largest economy in 2011 but is higher than the 2.6 percent gain reported for March.

The BOK also said 350,000 new jobs may be created this year compared to the year before up from an estimate of 280,000, with unemployment to dip 0.1 percent to 3.3 percent.

The central bank further said that South Korea's current account surplus could reach $14.5 billion this year from last year's $26.5 billion.

For 2013, the country's economy will likely grow 4.2 percent with inflation gaining 3.1 percent and the country's current account surplus dipping further to $12.5 billion.

The central bank predicted 320,000 more jobs may be created for the whole of next year, with unemployment hovering at 3.3 percent. (Yonhap News)