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Prospects for Macroeconomy 2017

Author Industrial Statistics Analysis Division Date 2016.11.28 Issue No

Domestic economy in 2017 is expected to get over its sluggish exports. However, an increase in capital investments, which had spurred economic growth in 2016, will slow down, and structural reforms will restrain an increase of private consumption. Therefore, the annual growth rate is expected to be about 2.5%, a little lower than that of 2016.
- Compared to the same period of the previous year (2016), the first and the second half are likely to have a growth at a similar pace. However, the growth rate compared to 2016 is expected to be low in the first half and high in the second half due to a base effect of the pattern of the previous year.
- Major variables will be economic policies of a new administration of America, interest rate hikes, slowdown of China’s economic growth, aftereffect of Brexit and other geopolitical uncertainty in an international aspect, and household debt, structural reforms, and political situations in a domestic aspect.

Purchasing power of low oil prices will no longer improve, and burdens of household debt service and effects of structural reforms will restrain private consumption, leading to a slow growth of private consumption at about 2.1%, a little lower than that of the previous year.

Capital investment is likely to move up by a small margin, thanks to recovery from sluggish exports. And construction investment is expected to be slower compared to 2016 due to measures to control real estate business, and budget cuts of government SOC. 

Inactive exports are to recover slightly due to an oil prices surge, mitigation against unit cost falls, and a slight rise of growth rate of world economy. 

Exports in 2017 will increase about 2.1%, imports about 3.6%. The trade balance will have a gain of about $86 billion, a slight decline compared to 2016.