South Korea's Finance Ministry lowered this year's economic growth forecast to take account of higher oil prices and the likelihood of slowing exports.
The US$887 billion economy will expand at a "upper 4 percent" pace this year, down from a previous forecast of 5 percent, Finance Minister Kwon Okyu said last week. His comments were embargoed until yesterday.
Increasing oil prices are fanning inflation and boosting costs to businesses and consumers in an economy that imports 97 percent of its energy needs. Exports may slow as the US housing recession cools the expansion of the world's biggest economy, damping global growth.
"Our external conditions will be tougher than in 2007," Kwon said. "Downside risk factors such as high oil prices and the US subprime problem are increasing."
Inflation is becoming a "burden" for the government, Kwon said. The central bank should closely check prices and economic and financial market conditions to "flexibly" manage its interest rate policy, he said.
The Finance ministry's new forecast is close to the estimate published by the Bank of Korea last month. The central bank sees growth of 4.7 percent, cooling from an estimated 4.8 percent last year. The economy grew 5.2 percent in the third quarter from a year earlier, the fastest annual pace in almost two years.
The economy may get a boost as the new president moves to implement his pledges to stimulate growth, said Lee Sang-jae, an economist at Hyundai Securities Co in Seoul.
Lee Myung-bak won a landslide victory last month to become the nation's first president from a corporate background. He has promised to increase annual economic growth to 7 percent and double per capita income to about US$40,000 by 2017. Planned projects include a 550km canal running almost the length of the country.
"The new government will likely take more steps to boost the economy," Lee at Hyundai Securities said. "So, the chances are rising that this year's growth may beat forecasts."
UNCERTAINTIES: Exports surged 34.1% and private investment grew 7.03% to outpace expectations in the first half, although US tariffs could stall momentum The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its GDP growth forecast to 3.05 percent this year on a robust first-half performance, but warned that US tariff threats and external uncertainty could stall momentum in the second half of the year. “The first half proved exceptionally strong, allowing room for optimism,” CIER president Lien Hsien-ming (連賢明) said. “But the growth momentum may slow moving forward due to US tariffs.” The tariff threat poses definite downside risks, although the scale of the impact remains unclear given the unpredictability of US President Donald Trump’s policies, Lien said. Despite the headwinds, Taiwan is likely
When Lika Megreladze was a child, life in her native western Georgian region of Guria revolved around tea. Her mother worked for decades as a scientist at the Soviet Union’s Institute of Tea and Subtropical Crops in the village of Anaseuli, Georgia, perfecting cultivation methods for a Georgian tea industry that supplied the bulk of the vast communist state’s brews. “When I was a child, this was only my mum’s workplace. Only later I realized that it was something big,” she said. Now, the institute lies abandoned. Yellowed papers are strewn around its decaying corridors, and a statue of Soviet founder Vladimir Lenin
UNIFYING OPPOSITION: Numerous companies have registered complaints over the potential levies, bringing together rival automakers in voicing their reservations US President Donald Trump is readying plans for industry-specific tariffs to kick in alongside his country-by-country duties in two weeks, ramping up his push to reshape the US’ standing in the global trading system by penalizing purchases from abroad. Administration officials could release details of Trump’s planned 50 percent duty on copper in the days before they are set to take effect on Friday next week, a person familiar with the matter said. That is the same date Trump’s “reciprocal” levies on products from more than 100 nations are slated to begin. Trump on Tuesday said that he is likely to impose tariffs
READY TO BUY: Shortly after Nvidia announced the approval, Chinese firms scrambled to order the H20 GPUs, which the company must send to the US government for approval Nvidia Corp chief executive officer Jensen Huang (黃仁勳) late on Monday said the technology giant has won approval from US President Donald Trump’s administration to sell its advanced H20 graphics processing units (GPUs) used to develop artificial intelligence (AI) to China. The news came in a company blog post late on Monday and Huang also spoke about the coup on China’s state-run China Global Television Network in remarks shown on X. “The US government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon,” the post said. “Today, I’m announcing that the US government has approved for us
RSS