SEJONG, Dec. 27 (Yonhap) -- South Korea's downgrade of its 2013 growth forecast is widely seen as underlining escalating concern that the export-driven economy may lapse into a phase of prolonged sluggish growth amid heightened external uncertainty and a delayed recovery in global markets.
Announcing next year's economic outlook and broad policy directions on Thursday, the finance ministry lowered its growth prediction for next year from 4 percent to 3 percent, which is in line with projections in the 3 percent range made by several think tanks.
The grim prediction comes as the growth rate of Asia's fourth-largest economy is estimated to have dropped sharply this year from 2011 on persistent external headwinds such as the eurozone debt crisis and a slump in the U.S. and other major economies.
Though final figures are not available for the fourth quarter, the ministry expected that the economy will grow 2.1 percent this year, lowering its earlier forecast of a 3.3 percent expansion. This follows a 3.6 percent gain reported in 2011.
Choi Sang-mok, the head of the finance ministry's economic policy bureau, told reporters that the growth forecast for next year is a "baseline" scenario, meaning that it could be lower than the estimate.
He cited a possible resolution of the eurozone crisis and an end to the debate over the fiscal cliff in the U.S. as possible upside factors but noted that there are many uncertainties hanging over the economy that would dampen growth.
"At this moment, downside factors outweigh upside factors," he said, suggesting that the country's growth rate could fall below the 3-percent mark next year.
If the growth estimate for next year proves to be right, this would mark three consecutive years that economic growth remains below the country's potential growth rate presumed to be in the upper range of 3 percent.
Potential growth refers to the maximum possible rate at which an economy can expand without triggering inflation.
The government expressed concerns that such a slowing growth trend might persist for a longer period of time as global uncertainty will likely weigh on its export-driven economy.
"Our economy keeps growing under the potential growth levels in the face of the delayed global recovery and frozen sentiment caused by extended uncertainty," the ministry said.
"As the growth momentum in the private sector is weakening as well, it is worrisome that slow economic growth might become permanent," it added.
The pessimistic views are based on the government's assessment of the current global economic situations, which could dictate the direction of the country's exports, which account for more than half of its growth.
According to the ministry, the country's exports will grow 4.3 percent on-year in 2013, while imports are projected to grow 4.6 percent.
It also predicted that the country's current account surplus will amount to about US$30 billion next year, quite lower than this year's estimated surplus of $42 billion.
Private-sector consumption is forecast to grow a mere 2.7 percent as such factors as sluggish housing markets and high household debts will likely hold many people back in their spending.
Affected in part by rising international grain prices, consumer prices are expected to grow 2.7 percent next year, slightly higher than this year's 2.2 percent gain. The number of jobs to be created will be about 320,000, compared with this year's 440,000 works this year, the ministry said.
As for the policy directions for next year, the ministry said that its focus will be laid on stabilizing the country's macroeconomic situations, bolstering economic activities and pushing for "coexistence" development between rich and poor, and small and large companies.
Especially, in the face of the slowing economic growth, the ministry said that it will work hard to boost the overall economic vitality by frontloading government spending, easing regulations for the sluggish housing market and improving the overall investment environment.
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