Concerns grow over S. Korean economy growing 0.1 pct or less for 4th quarter
Concerns are growing over the possibility of the South Korean economy growing by 0.1 percent or less for the fourth consecutive quarter for the first time in its history, data showed Sunday, Yonhap reports.
Such an outlook comes as the Bank of Korea (BOK) is set to announce the country's real gross domestic product (GDP) growth of the first quarter on Thursday, after hinting in a recent report that the quarterly growth could come under 0.2 percent, weighed down by household debts and weak domestic demand amid growing uncertainties from U.S. tariff policies.
The central bank report also said negative growth in the first quarter cannot be ruled out.
If the country's quarterly growth comes in at below 0.1 percent, it would mark the fourth straight quarter of such weak growth, following a 0.23 percent contraction in the second quarter of last year and 0.1 percent and 0.07 percent growth in the third and fourth quarters, respectively.
The lackluster growth trend would mark the first time the South Korean economy expanded so slowly over an extended period since the BOK began compiling relevant data in 1960.
The bleak outlook is attributed to the country's low potential growth rate, which has hovered at the 2 percent range in the past years and is forecast to fall to 1.8 percent in the 2025-29 period and eventually to 0.6 percent in the 2045-49 period unless significant developments are made, according to the BOK.
Weak domestic demand, triggered by heavy household debt and project financing issues in the construction sector, is also considered another setback for the South Korean economy, amid political uncertainties and fiscal soundness issues.
Reflecting such concerns, major institutions have been lowering their annual growth forecasts for South Korea.
An April 10 survey conducted by Bloomberg showed that 42 domestic and foreign institutions expected the South Korean economy to grow 1.41 percent this year, lower than the BOK's February estimate of 1.5 percent.
Among them, seven institutions, including Bloomberg Economics, Citigroup, iM Securities and JP Morgan, forecast the economy to post an annual growth rate lower than 1 percent.
As earlier reported, South Korea's government plans to provide 25 tln won in liquidity to help exporters amid global trade war.
