The Korea Development Institute has lowered South Korea's growth outlook for this year to 2.four percent, down zero.two percentage points from its previous forecast last November.
That's the same as the OECD's growth projection released on Tuesday, but lower than the finance ministry and the Bank of Korea's outlook.
The KDI said in its economic outlook report Wednesday that on top of falling investment, declining exports is also weighing on the local economy.
"Global economic growth has slowed down rapidly, hurting Korea's export growth. The local economy relies heavily on exports. If exports fall, domestic demand will also be affected."
The growth in exports has fallen for five consecutive months since last December due to falling chip exports and weakening demand from China.
Between May 1st and 20th, exports fell more than 10 percent on-year, making it likely the downward trend is set to mark a six month streak.
The KDI pointed to the ongoing U.S.-China trade dispute and a turnaround in chip exports as two key factors that could affect Korea's economic growthand forecast total export growth of 1.six percent for 2019.
It also forecast domestic demand to slow downand facilities and construction investment to contract more than four percent this year on slowing semiconductor investment and falling demand in the housing construction sector.
The think tank expected job growth for this year to record 200-thousand, up from 150-thousand people last year thanks to the government's job creation policies.
The unemployment rate is forecast to stay similar to last year's at 3.nine percent.
The KDI pointed to the side effect of the minimum wage hike and the 52-hour-work week as short-term risk factors.
It recommended an expansionary fiscal and monetary policy in the short-run and strengthening the social safety net and raising productivity in the mid-to-long term to support the local economy.
Kim Hyesung, Arirang News.