S.Korean gov't revises down 2019 growth outlook to 2.4-2.5 pct

Source: Xinhua| 2019-07-03 14:15:26|Editor: Shi Yinglun
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SEOUL, July 3 (Xinhua) -- The South Korean government on Wednesday revised down this year's growth outlook to 2.4-2.5 percent on external uncertainties that were forecast to cause the weakening of export and facility investment.

The growth outlook was down 0.2 percentage points compared with the figure estimated six months ago, according to the Ministry of Economy and Finance.

The country's real gross domestic product (GDP), adjusted for inflation, expanded 2.7 percent last year. The ministry set its 2020 growth forecast at 2.6 percent.

The downward revision was attributed to external uncertainties such as the global trade dispute and the downturn in business cycle of the global semiconductor industry.

Export, which accounts for about half of the export-driven economy, was predicted to diminish 5 percent this year from the previous year. It was down from a 3.1 percent expansion estimated six months earlier.

The outbound shipment kept sliding for seven straight months through June. Hit by the continued export reduction, the real GDP contracted 0.4 percent in the first quarter from the previous quarter.

To bolster the economic slowdown, the government unveiled 6.7 trillion won (5.7 billion U.S. dollars) worth of extra budget, but it had yet to be passed through the National Assembly amid the political wrangling over the amended election law.

Outlook for facility investment was downgraded to a 4 percent reduction from an estimate of 1 percent growth six months earlier.

To reinvigorate the corporate investment, the government will lengthen and expand tax credit for facility investment.

It will also provide a policy fund of 7.5 trillion won (6.4 billion U.S. dollars) for new export engines such as secondary battery, biomedicine, electric vehicles and cosmetics, while offering a policy fund of 10 trillion won (8.5 billion U.S. dollars) to new growth engines, including next-generation cars, non-memory chips and biomedicine.

Private consumption tax will be cut for the next six months to those who change decrepit vehicles into gasoline or LPG-powered cars as part of efforts to stimulate consumer spending.

Private consumption, another main growth engine of the economy, was projected to go up 2.4 percent in 2019, but it was down 0.3 percentage points six months earlier.

The government maintained its income-led economic policy to narrow income cap by boosting earnings especially among the low-income bracket.

This year's outlook for investment in the construction sector was revised down to a 2.8 percent decline from a 2.0 percent slide estimated six months earlier.

It came as the government unveiled a set of measures to control speculative investment in the real estate market in a bid to curb the record-breaking household debts.

Job creation was forecast to increase 200,000 in 2019 from the previous year, an upward revision from an expansion of 150,000 jobs estimated six months ago. In 2018, the job creation was a growth of 97,000.

This year's outlook for the employment rate among those aged 15-64 was unchanged at 66.8 percent.

The upward revision was attributed to the government's efforts to create jobs especially among the elderly people amid the rapidly aging population.

As the country's social safety net was insufficient to support the after-retirement life of the elderly, the government provided job-creating projects for the older generation in the public sector.

Outlook for the headline inflation was set at 0.9 percent in 2019, down 0.7 percentage points from an estimate six months earlier. It was credited to supply-side factors such as cheaper crude oil and stable prices for farm goods.

Current account surplus was forecast to reach 60.5 billion U.S. dollars this year, down 3.5 billion dollars from a figure six months ago.

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