South Korea’s economic growth is set to slow to a more normal level of 4.5 percent next year following its strong recovery from the global financial crisis, the South Korean central bank said yesterday.
The estimated expansion compares with expected growth of 6.1 percent this year, the Bank of Korea said in its economic outlook report.
South Korea is the world’s 15th-largest economy and an export powerhouse home to major global manufacturers including Samsung Electronics Co and Hyundai Motor Co.
The country’s economy rebounded strongly this year after sputtering to a meager 0.2 percent expansion last year, following the financial crisis and global economic slowdown.
Growth of 4.5 percent next year “can be assessed as a level close to the trend level,” the bank said in the report, highlighting that this year’s strength followed last year’s low base.
The 4.5 percent figure for next year was unchanged from the bank’s July outlook, though the 6.1 percent estimate for this year was raised from the previous 5.9 percent.
South Korea’s economy, Asia’s fourth largest, will likely feel the brunt of next year’s slowdown in the first half of the year as frontloading of budget spending — which can have a stimulatory effect — will be reduced during that period, the bank said.
“Momentum for economic recovery in advanced countries including the US will gain strength in the second half [of next year],” the bank said in offering a reason why the economic expansion is expected to pick up in the second half.
The bank said that growth was likely to strengthen to 4.7 percent in 2012.
Consumer price inflation, which has been a source of concern this year, is set to increase next year to 3.5 percent from this year’s expected 2.9 percent, the bank said.
The Bank of Korea raised its benchmark rate to 2.25 percent in July amid inflation concerns and again to 2.5 percent last month.