Economic Growth Rate Same As Last Year’s, “Around 4 Percent”

The Samsung Economic Research Institute (SERI), a representative private economic institute, maintained its forecast for the economic growth rate this year at 3.7 percent, the same figure forecast late last year. That is because recently, some economic indicators such as private consumption have shown signs of economic recovery, but whether or not it will lead to a recovery phase in full swing is uncertain.

Along with this, other private economic institutes such as LG Economic Research Institute, Korea Economic Research Institute and Hyundai Economic Research Institute are expected to maintain their estimates of around 4 percent for a while.

The SERI said in its report: “2005 Economic Prospects” released on February 20, “Overall, economic recovery is seeming to take place thanks to the recently improved confidence in the economy and the appreciation of stock prices, but it is hard to say Korea has entered a recovery phase in full swing.” Thus, it decided to maintain its forecast of 3.7 percent growth first released last November.

The report pointed out, “Increases in domestic sales of department stores and automobiles in January were reflections of a temporary effect as some major companies provided bonuses and other benefits for the New Year’s holidays.”

The Korea Economic Research Institute also decided to maintain its December forecast of 4.1 percent.

Hur Chan-kook, the director of the Macroeconomic Center of KERI explained, “Although the economy is going to turn around gradually as domestic consumption recovers, starting from the high-income bracket, it cannot recover dramatically.”

Along with this, two other institutes, LG Economic Research Institute, and Hyundai Economic Research Institute, are maintaining their economic growth forecasts of 4.0 percent and 3.8 percent, respectively.

Joong-Hyun Park sanjuck@donga.com