Gov't Slashes Growth Forecast
04 July, 2019
The government on Wednesday finally slashed its own growth forecast by 0.2 percentage points to 2.4-2.5 percent, long after most global institutions said Korea's economy will grow barely more than two percent this year.
Despite pumping in more than W40 trillion to stimulate the moribund economy, the government admitted the prospect of the lowest growth since 2012 (US$1=W1,170).
But the government refused to admit that its own growth policies failed and blamed external variables and shifting consumer spending patterns.
Finance Minister Hong Nam-ki said the adjustment "reflects weakened trade volume, sluggish semiconductor industry conditions and seven straight months of declining exports." But he also claimed employment "is improving due to the effects of government policies, while distribution indices improved thanks to a bolstered social safety net."
He denied that the financial woes of small businesses are mainly due to the drastic minimum-wage hike but blamed "excessive competition and increasing online sales."
The economy is unlikely to live up to even the new, more modest expectations. S&P, Moody's and Fitch forecast that Korea's GDP will grow only between 2.0 and 2.4 percent.
Shin Se-don at Sookmyung Women's University said, "The economy grew an estimated 1.8 percent in the first half of this year compared to the same period of 2018, which means growth will have to reach three percent to achieve the 2.4 percent annual figure, which is improbable."
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