Hyundai Research Institute "Domestic Growth Rate 2.2% Next Year... Growth Slowdown"

[Asia Economy Reporter Choi Dae-yeol] There is a forecast that South Korea's economic growth rate will decline next year compared to this year. This is due to weakening growth trends in major countries and the high possibility of reduced exports caused by inflation and exchange rates.

On the 25th, the Hyundai Research Institute stated in its weekly report "2023 Korea Economic Outlook" that "the global economy is expected to slow its recovery due to side effects of inflation, high-intensity monetary tightening by major countries, and the possibility of an economic slowdown in China," adding, "International oil prices are expected to show a gradual decline but will still remain at high levels throughout the year."

They forecast the growth rate for next year to be around 2.2%. Compared to last year's annual economic growth rate of 4.1% and this year's expected 2.5%, this indicates a further decline.

The institute expects the strong dollar to ease somewhat next year. Accordingly, the euro, yen, and yuan are expected to show a firm but stable trend. The institute explained, "As the Korean economy's recovery slows, the growth rate is expected to slightly decline compared to this year," and "the overall economic trend will continue to slow until the first half of the year and then improve from the second half, showing a 'low in the first half, high in the second half' pattern."

Private consumption is expected to improve in face-to-face service sectors as the resurgence of COVID-19 subsides, but the burden of household principal and interest repayments will increase due to interest rate hikes, making the outlook negative. High inflation is also a burden. The institute stated, "Domestic and international economic uncertainties are still expected to be high, likely causing household consumption sentiment to shrink and delaying consumption recovery throughout the year."

Construction and facility investments are expected to either turn to an increasing trend or continue steadily increasing next year. Domestic exports are expected to slow their growth, while consumer prices are anticipated to see a reduced rate of increase next year. In the employment sector, the institute forecasts that the unemployment rate will rise next year and the increase in new employment will also slow down.