South Korean Economy Projected to Grow 3% in 2018

By Kwanwoo JunFeaturesDow Jones Newswires

South Korea's government expects economic growth to slow next year after a faster-than-expected expansion in 2017.

Asia's fourth-largest economy is likely to grow 3.0% in 2018, unchanged from the July projection but lower than this year's estimate of 3.2% expansion, the Ministry of Strategy and Finance said in a semiannual economic outlook released Wednesday.

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South Korea, the home of Samsung Electronics Co. and other global suppliers of memory chips, smartphones, TVs and electronics, has outperformed earlier growth forecasts for 2017 on brisk exports and higher government spending.

Exports and consumption will likely continue to improve next year on steady overseas demand and fiscal stimulus at home, but facility investment and housing construction are expected to moderate after peaking this year, the ministry said.

The ministry said easing trade tensions with China and the 2018 Winter Olympics are among factors that will help boost growth next year, though it cautioned that rising global protectionism, cooling housing markets and rising interest rates may be a drag on the Korean economy.

Consumer prices are expected to rise 1.7% in 2018, compared with the July forecast of 1.8% for next year and this year's estimated 1.9%, it said. The projections remain shy of the central bank's 2% inflation target.

Job creation and household-income growth will likely continue to take center stage in the economic policies of left-leaning President Moon Jae-in, who took office in May.

The ministry said it would front-load the national budget spending next year to spur growth. The Moon administration this year passed a $10 billion supplementary budget and a 16% increase in the country's minimum wage, and has pledged to keep its fiscal policy "expansionary" next year.

The ministry added that it expects the country's per capita gross national income to breach the $30,000 level for the first time in 2018. As many as 320,000 new jobs will likely be added, matching the pace of job growth in 2017, it said.

Write to Kwanwoo Jun at

(END) Dow Jones Newswires

December 27, 2017 01:15 ET (06:15 GMT)