S. Korea likely to cut 2013 growth outlook

The South Korean government is likely to cut its 2013 estimate for economic growth to the 3-percent range as downside risks at home and abroad will weigh on the economy, officials said Sunday.

The government earlier forecast that Asia's fourth-largest economy would grow 4 percent next year, much rosier than outlooks presented by the central bank and private think tanks.

"I think that we have to consider the weak growth in the third quarter (in adjusting the growth forecast). The government is taking into accounts a set of downside risks," said a senior official at the finance ministry.

The central bank and international organizations put their growth estimate to the 3 percent range with foreign investment banks suggesting a 2 percent growth outlook. The Bank of Korea's

2013 growth projection was lowered to 3.2 percent and the state-run Korea Development Institute forecast the Korean economy to grow 3 percent next year.

The bleak outlook came as Asia's fourth-largest economy grew a mere 0.1 percent in the third quarter from three months earlier, the weakest growth since the first quarter of 2009, on faltering facility investment.

Downside risks from the globe continue to weigh on the export-dependent Korean economy. Despite some positive signs of recovery in consumption and employment in the U.S., stalled talks over a U.S. fiscal cliff are casting a cloud over the global economic outlook.

"The local economy looks better in 2013, compared with this year. But the 2013 growth estimate will hinge on how much the Korean economy could rebound in the second half," said an official at Seoul's finance ministry.

The government tentatively set the date of announcing its 2013 economic management plan on Dec. 27 as the country holds the presidential election on Dec. 19. (Yonhap News)