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S. Korea's GDP expected to grow 4.8 pct in 2010
SEOUL, Dec. 2 (Yonhap) -- South Korea's gross domestic product (GDP) is expected to jump 4.8 percent on-year in 2010 thanks mainly to stagnant economic growth this year, a state-run think tank said Wednesday.
Korea Institute for Industrial Economics and Trade (KIET) said the low base effect caused by a weak economy this year will help to buoy growth figures in the new year.
Seoul expects the national economy to contract this year compared to 2008, although some forecast the GDP edging up 0.1 percent on-year. Because growth is measured by comparing gains on an annual basis, low or negative gain in the previous year will help growth numbers in the following year.
'Discounting the base effect, the economy may move up in the 3 percent range,' the institute under the Ministry of Knowledge Economy said, adding more rapid gains are expected for the first half with growth falling off after July.
It said that moves to cut back on stimulus programs and possible measures to implement a so-called exit strategy to reign in excess liquidity in the market were downside risks along with a rise in energy costs and unstable foreign exchange rates.
On the upside, moves by local industries to build up inventory in anticipation of full-fledged economic recovery could spur growth.
KIET, also said steady improvements in the worldwide economy may help cause exports to move up 12.8 percent on-year to US$410.5 billion in 2010, with the country's trade surplus to hit $23.6 billion. Imports are forecast to move up 19.6 percent to $386.9 billion next year.
South Korea's exports may contract 13.8 percent on-year, while imports could nosedive 25.6 percent for a annual surplus surpassing $40 billion this year.
The report said that private consumption may move up 4.2 percent on-year in 2010, while business investment could gain 14.1 percent next year vis-a-vis 2009.
Private consumption and business investment are key indicators of a country's economic health.
The think tank, meanwhile, said that of the country's top 10 industries, only ships may post negative growth of 8.0 percent on-year in 2010.
It said display panels and steel may grow by double digits of 11.2 percent and 13.0 percent respectively.
Production of semiconductors and information technology products, fueled by both local consumption and exports may gain 6.0 percent and 7.1 percent annually while autos, petrochemicals and general machinery could move up 6-9 percent in the new year.
Textiles and consumer electronics are also expected to post modest gains in production next year, the report said.
KIET said that despite overall turnaround in the global economy, advanced industrialized countries may be able to pull off growth of around 1 percent.
yonngong@yna.co.kr
(END)
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