S. Korea to gradually recover growth next year: IBs

Foreign investment banks (IBs) expect the South Korean economy to see its growth improve at a gradual pace next year, helped by global stimuli and the recovery of domestic demand, a report showed Tuesday.

Morgan Stanley projected the monetary easing by the United States and China will improve global economic conditions, benefiting South Korea's exports, a main driver of the country's growth, according to a report by the Korea Center for International Finance.

South Korea grew 0.2 percent on-quarter in the July-September period, the slowest pace in nearly three years in the face of the global economic downturn.

Barclays Capital and Goldman Sachs noted Korea's exports have been recovering since June, predicting that its competitiveness in brand values bodes well for its outbound shipments in 2013.

Exports for Asia's fourth-largest economy increased 1.2 percent on-year in October, marking an expansion for the first time in four months.

Other IBs, including JP Morgan, added possible negative impacts of the local currency's rise will likely be offset by a steady growth in exports to be seen for next year.

Morgan Stanley forecast that a slwdown in private consumption stemming from a high level of household debts will likely bottom out by the second quarter of 2013, showing a moderate recovery.

Meanwhile, most IBs expected South Korea's central bank to hold its key rate unchanged at its monthly monetary policy meeting slated for this Friday, according to the report.

The Bank of Korea cut the benchmark rate twice by a quarter percentage point each to 2.75 percent in the second half in a bid to boost the economy. (Yonhap News)