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Macroeconomic outlook for the latter half of 2015

Author Industry and Trade Analysis Division Date 2015.06.24 Issue No 616

In the Korean economy, the growth rate is expected to be about 2.9% annually as the previously weak economy is expected to recover slightly and domestic demand is to go up gradually thanks to low oil prices and low interest rates.  
Growth in the second half is likely to be slightly higher than that the previous year due to the upward trend in the weak economy and baseline effect of the patterns in the previous year.
However, in general, the growth is projected to be lower than last year because of sluggish exports and dampened domestic demand caused by burdens of household debt.
Along with external factors such as the possibility of raising federal fund rates by the US government and the prospects of the Greek financial situation, internally downside risks would generally somewhat prevail among major factors including development and impact of the MERS situation and effects of the stimulus package.  

Although terms of trade improved owing to low oil prices has led to an increase in purchasing power, private consumption is estimated to keep rising modestly due to the MERS situation and other restricting factors.

Equipment investment is projected to keep growing at a relatively rapid pace following last year because of reduced costs resulting from low interest rates, and construction investment is likely to increase more compared to the previous year, thanks to recovery in the real estate sector.

It is projected that exports would be sluggish in the full year, but currently lackluster exports are estimated to recover slightly as the global economy shows signs of recovery and the pace of declining prices slows down.   
As exports and imports in 2015 are expected to fall by about 3.1% and 9.7% respectively, the drop in imports is anticipated to be bigger than that of exports; as a result, the trade surplus is projected to increase significantly, recording roughly $ 80.5 billion.