KDI Says 3.1% Growth Not Likely Realized.

The Korea Development Institute, the leading government economic research institute predicted that there is a high chance that the real economic growth rate of 2003 may drop to below 3%.

“This year`s growth rate is likely to drop than expected. It wouldn`t be easy to achieve the aimed figure, 3.1% percent,” head of KID, Kim Jeong-su said.

Some argue that the second additional supplementary budget (3 trillion won) that the government decided to draw up to help damage restoration of the Typhoon Maimi will push the growth rate, but Kim said, “Even after considering the supplementary budget, at the moment, it is unlikely to achieve the aimed figure.”

In particular, supposing that the data are only estimation, but the 11% drop in investment on equipment cannot be explained with only economic variables, Kim said. “I believe the government is also preparing several few measures for labor-union relations and others.”

In the meantime, Samsung Economic Research Institute lowered their forecast for next year`s growth rate to 4.3 percent, lower than the potential growth rate (early 5%). This is the lowest figure among next year`s growth rate forecasts so far.

“This year and next year`s gross domestic product (GDP) growth rates are lower than the potential growth rates. Such a thing never happened since 1970s. If the won-value surge next year while the domestic consumption continues to be slow, export, Korea`s growth engine, could even be dragged altogether,” Lee Hwang-sung, chief research fellow of SERI said.

koh@donga.com eye@donga.com