South Korea’s economic growth will likely decelerate in 2012 due to a global slowdown and rising tensions in the Middle East, a think tank said Thursday.
Asia‘s fourth-largest economy is expected to grow 3.2 percent this year, slowing from last year’s 3.6-percent expansion, according to the Korea Economic Research Institute (KERI) under the Federation of Korean Industries, the nation‘s largest business lobby.
The latest growth projection is also down from its earlier estimate of a 3.5 percent gain made in October, the research institute said.
It said that the country’s economic growth will be hampered by a slowdown in the world economy stemming from the European debt crisis and a hike in oil prices sparked by the Iranian issues.
The global economic slump will have an impact on South Korea‘s exports, on which the country’s economy highly depends, with its trade surplus falling to $13.6 billion in 2012 from an earlier estimate of $14.4 billion, the think tank said.
Geopolitical risks from a power transition in North Korea and the upcoming parliamentary and presidential elections are major risk factors threatening South Korea‘s economy this year, it added.
KERI said South Korea’s consumer inflation is expected to stand at 3.5 percent in 2012.
The local currency is expected to fall against the U.S. dollar in the first half of this year but reverse its course in the later half to trade at around 1,093 won to the greenback thanks to the easing of the financial crisis in the U.S. and Europe.
(Yonhap News)
