State-run think tank, the Korea Development Institute, in a report on Tuesday lowered its forecast for the Korean economy this year by zero.two-percentage-points from its previous estimate to 2.7-percent… the lowest level since 2012.
It also projected the Korean economy to grow 2.6-percent next year which is zero.one-percentage-points lower than its previous figure released during the first half of this year.
The report cited growing economic uncertainties as the main culprit including a slowdown in private investment, sluggish employment and piling household debt, currently estimated at around one.three trillion U.S. dollars.
The report pointed out the government's expansionary fiscal measures although needed have limited effect in strengthening the competitiveness of local businesses which is essential for local economic recovery.
The report says although the country's exports are expected to continue booming through next year risks are expanding due to an intensifying trade battle between China and the U.S. as well as the long-term effects of trade protectionist measures.
It advised the government to continue pursuing monetary easing measures since core inflation which excludes volatile food and oil prices, is in the low one-percent range.
Kim Ji-yeon, Arirang News.