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Macroeconomic outlook for 2016

Author Industry and Trade Analysis Division Date 2015.11.17 Issue No 622

In the domestic economy in 2016, export sluggishness is expected to ease up, and thanks to low oil prices and low interest rates, domestic demand is expected to grow modestly by approximately 3% annually
● Growth would be higher than that of this year but it significant improvements of both exports and domestic demands cannot be expected due to modest world growth and burdens of housing debt in Korea
● Interest rate hike by the US and the aftermath, the extent of slowdown in growth of China, and external factors such as geopolitical instability are key variables; overall downside risks are expected to somewhat prevail


Private consumption may increase by mitigated export sluggishness and price stability thanks to low oil prices, but the increase would be modest as housing debt and housing expenditures would act as restricting factors


Facility investments may be more active compared to those of this year because of the effects of low interest rates and eased export sluggishness, and construction investments are expected to slowed down from this year due to the stabilized real estate market and reduced SOC budget by the government 


Exports are estimated to increase slightly, as the world economy is showing signs of modest recovery and stabilized trend of falling unit prices
● Exports and imports in 2016 are expected to grow 2.1% and 3% respectively and the trade balance are estimated to record a large surplus of about 80 billion dollars similar to that of this year