A leading South Korean think tank sharply lowered its 2015 forecast of the economy’s growth Tuesday, citing falling exports and the fallout from the Middle East Respiratory Syndrome outbreak.
In its latest economic outlook, the LG Economic Research Institute revised down its growth prediction to 2.6 percent from an earlier 3 percent estimate made three months ago. The South Korean economy expanded 3.3 percent on-year in 2014.
The downgrade was largely attributed to the country’s weak exports, as well as the negative impact of the MERS outbreak on domestic consumption.
In June, Asia’s No. 4 economy saw its exports shrink 1.8 percent on-year to $46.95 billion, according to government data.
In the first half of the year, outbound shipments backtracked 5 percent from a year earlier to $269.01 billion.
Consumption was hit by the MERS scare in recent months as many people refrained from going outside, with LGERI predicting the country’s growth domestic product to likely fall 0.3 percent as a result.
The latest revision in the economic growth outlook comes after a series of downgrades made by the government and other think tanks.
The government has revised down its 2015 growth projection to 3.1 percent from 3.8 percent, and the Korea Economic Institute also downgraded its forecast to 2.7 percent last month from the previous 3.4 percent outlook in March.
The Bank of Korea, which slashed its estimates to 3.1 percent from 3.4 percent in April, is also forecast to further cut its numbers this week.
“As the growth engine of the global economy is shifting from the manufacturing and trade sectors to the service industry and domestic markets, it has become difficult for exports to lead South Korea’s growth as they did before,” said Lee Geun-tae, a senior researcher at LGERI. (Yonhap)
