Woori Financial Research "Next Year's GDP Growth Rate 2.1%... Semiconductor Recovery"

Woori Financial Research Institute forecasted that next year's Gross Domestic Product (GDP) growth rate will be 2.1%, which is 0.8 percentage points higher than this year.

In a report released on the 13th, Woori Financial Research Institute stated, "Despite the global economic slowdown, the domestic economy, showing a rebound in exports and improvement in the service sector, is visibly recovering centered on the semiconductor and IT sectors, and the GDP growth rate is expected to rise from 1.3% this year to 2.1% next year."

The institute added, "Private consumption is expected to increase only moderately due to sustained inflation and interest rate burdens and expanding household debt, and construction investment is expected to remain sluggish due to cost burdens and reductions in government SOC budgets. However, new facility expansions following the rebound in the semiconductor and IT industries, along with improvements in corporate performance and financing, are anticipated." Private consumption and construction investment are expected to decrease from 2.0% and 2.5% this year to 1.9% and 1.2% next year, respectively, while facility investment is expected to rise from 0% to 1.4% during the same period.

Consumer prices next year are projected to increase by 2.7%. The institute explained, "Consumer prices will slow down due to a moderation in the rise of service prices and weak demand caused by prolonged high interest rates, but uncertainty in raw material prices due to geopolitical risks will cause the rate to exceed the Bank of Korea's target level of 2.0%."

Regarding employment, the institute said, "Employment is expected to continue recovering due to the strong service sector, improvement in manufacturing conditions, and increased economic activity among women and the elderly. However, the increase will be limited due to sluggish construction conditions and the base effect from the previous year," forecasting 210,000 new jobs next year, which is 120,000 fewer than this year's 330,000.

The institute revised this year's annual GDP growth rate to 1.3%, down 0.2 percentage points from the 1.5% announced in August. It stated, "The domestic economy, which grew by 1.1% (year-on-year) up to the third quarter this year, is expected to grow by 1.3% annually as private consumption and facility investment slightly improve."