South Korea’s top central banker said Friday that Korea’s 2012 growth outlook cannot be seen as bad as domestic demand will likely prop up growth despite external economic uncertainty.
The Bank of Korea (BOK) forecast last week that Korea’s economic growth is expected to slow to 3.7 percent next year from an estimated expansion of 3.8 percent this year as Europe’s debt crisis and a global slowdown are feared to hurt exports.
BOK Gov. Kim Choong-soo said in a meeting with local bank heads that Korea’s growth prospect for next year cannot be seen as dim because domestic demand will back up growth.
According to the BOK, exports, which account for about 50 percent of the Korean economy, are forecast to expand 5 percent next year, slowing from an estimated 11.6 percent expansion for this year. Private spending is expected to grow 3.2 percent in 2012 after gaining 2.5 percent this year.
Kim said that the contribution of domestic demand will account for 2.1 percentage points out of the 2012 growth while exports will likely make up 2.1 percentage points out of the 3.8 percent expansion for this year.
“The growth of consumer spending may slow next year, but domestic demand is likely to get better, given the expected growth of construction investment and capital spending,” Kim added.