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Macroeconomic Outlook for the Second Half of 2014

Author Economic Analysis and Forecasting Analysis Date 2014.06.24 Issue No 592
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In 2014, Korean economy is expected to grow more or less than 3.8% on an annual basis thanks to the increase in its export resulting from the continuous recovery of global economy and domestic demand.

 

While the economy would grow by a similar rate in the first and second half, the export and domestic demand would be relatively on the increase as the recovery broadens.

Slowdown in China would serve as major external downside risk while the household debt and effect of the deb would act as internal downside risks.

 

Thanks to the improvement of income flow resulting from the recovery of export, and enhanced purchasing power caused by the stabilized oil price and decline in exchange rate, private consumption growth is prospected to expand more. However, its growth would not reach the economic growth rate as burden of household debt serves as factor controlling the consumption growth.   

 

Plant and equipment investment is prospected to maintain its recovery trend in the second half thank to the increase in export, and the eased uncertainty over the global economy. Although construction investment is expected to also increase in the second half, the increase would be somewhat lower than in the previous year.

 

Export is anticipated to grow 5.3% on an annual basis as its growth would expand in the second half thanks to the global economic recovery led mainly by advanced countries.

 

Export would be relatively on the moderate rise due to the constraints such as relative slump in emerging market which is the main export destination for Korea, and the decrease in exchange rate.

 

 Import is expected to rise more than the export due to the recovery of export and domestic demand while trade surplus would hover around $40 billion just as it did in the last year.