Korean Economic Growth for 2010 Projected at 4.6%

The Korean economy is expected to grow 4.6% in 2010. Quarterly, year-on-year growth is projected at 0.2% in the first quarter, 1.2% in the second quarter, 1.6% in the third quarter and 1.8% in the fourth quarter. Affected by improvements in income and consumer sentiment, domestic demand recovery is likely to quicken amid a favorable export trend expected in line with the realization of the global economic recovery.

In 2010, private consumption is expected to grow 4.8%, owing to improvements in employment and income. Facility investment is also projected to rebound to 9.0% growth from a 9.1% decline last year in expectation of the economic recovery and the increased investment potential at large enterprises. However, construction investment growth is likely to slow to 0.2% in 2010 from a 4.4% expansion last year due to sluggish business conditions. Meanwhile, exports (U.S. dollar basis) are expected to grow about 15%, owing to the recovery trend in the global economy and base effects.

Current Account Surplus at US$20 Bil., Inflation at 3.0%, Won/U.S. Dollar Fx Rate at 1,120 Won-Level

Influenced by faster growth in imports than exports, greater overseas service demand, etc., the scale of the current account surplus is expected to reach about US$20 billion in 2010, a sharp drop from US$42.7 billion in 2009. Exports (U.S. dollar basis) are expected to grow about 15%, owing to a recovery trend in the global economy and base effects while imports are forecasted to grow about 20% due to the domestic economic recovery and import unit price increases.

Affected by the economic recovery and import unit price increases, inflation rate is expected to hit 3.0% in 2010, up slightly from 2.8% in 2009. The Won-U.S. dollar exchange rate is projected to average 1,120 won on an annual basis in 2010 to post a mild declining trend due to a weakening dollar, the current account surplus, etc.

Need to Increase Policy Rate to Keep Pace With Economic Recovery

As the economy is expected to grow faster than the potential growth rate in the second half of 2010, there is a need to advance the timing of a policy rate increase to the first half of 2010. Fiscal policy should expand the private sector's role through tax reduction and smaller government and move toward securing fiscal health.

(아래 표지를 누르시면 원문으로 이동합니다.)