Economic and Industrial Outlook for the Second Half of 2024
The Korea Institute for Industrial Economics and Trade (KIET) forecasted that the Korean economy will grow by 2.5% this year. Although the domestic real economy is sluggish in consumption and investment due to high inflation and high interest rates, exports, led by semiconductors and automobiles, are expected to drive overall economic growth.
On the 30th, KIET released the "Economic and Industrial Outlook for the Second Half of 2024," which included these details.
Park Seong-geun, a research fellow at KIET, stated, "In 2024, the domestic economy’s growth in the domestic demand sector will be constrained by the prolonged high inflation and high interest rates. However, strong export performance in key industries such as semiconductors, automobiles, and shipbuilding will lead overall economic growth, resulting in an annual growth rate of 2.5%."
The Korean economy is expected to show a "high in the first half, low in the second half" pattern. It is projected to grow 2.8% in the first half and 2.2% in the second half, totaling 2.5% for the year. Major risk factors in the first half of this year include the global inflation trend, timing of interest rate cuts by major countries, geopolitical conflicts such as wars, and policy uncertainties following the U.S. presidential election.
Private consumption in 2024 is expected to continue a weak increase of 1.8% due to the prolonged high inflation weakening real purchasing power and the burden of principal and interest repayments amid high interest rates. However, in the second half, the sluggishness is expected to ease somewhat thanks to stabilized inflation and improved income conditions from export expansion.
Facility investment is forecasted to increase moderately by 2.3%. While the semiconductor industry is expected to recover somewhat, the high cost of financing due to maintained interest rate policies and persistent domestic and international uncertainties will limit the growth.
Exports are projected to increase by 8.3%, from $632.2 billion last year to $684.8 billion this year, supported by strong performance in key industries such as semiconductors and automobiles. Park said, "Semiconductors have recently shown a strong recovery exceeding 50%, and exports are expected to surpass $130 billion by the end of the year. The trade balance will record a surplus of about $33.5 billion for the year, achieving an annual surplus for the first time in three years, thanks to robust export growth exceeding imports."
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