World Bank: Korean Economy to Grow 2 Pct. Next Year

The World Bank has predicted that the Korean economy will grow two percent next year, higher than the outlook for the global economy of 0.9 percent.

In a report released Tuesday, the bank said GDP growth of developing nations will slow from 6.3 percent this year to 4.5 percent next year, and that of advanced economies will fall from 1.3 percent to minus 0.1 percent.

In sum, the global economy will see growth fall from 2.5 to 0.9 percent over the same period.

The report said the United States will see growth of minus 0.5 percent next year, the 15-country euro zone minus 0.6 percent, and Japan minus 0.1 percent. China’s growth is expected to decrease from 11.9 percent this year to 9.4 percent the next, and India’s will drop from nine percent to 6.3 percent.

In an additional report on East Asia’s economy, the World Bank said Korea’s growth will fall from 3.9 percent this year to two percent in 2009.

Comparing Korea’s major economic indicators in 1996 and last year, the bank said the amount of foreign exchange reserves soared dramatically but the share of short-term debt in GDP did not noticeably improve. It also predicted global trade volume, which has grown 6.2 percent this year, will fall 2.1 percent next year for its first decline since 1982.

International oil prices are expected to drop more than 30 percent from 101.2 U.S. dollars per barrel this year to 74.5 dollars the next. The global economic situation will improve in 2010, however, when the world economy is forecast to grow three percent and trade volume six percent. For the year, the Korean economy will grow an estimated 3.8 percent.

The Organization for Economic Cooperation and Development also forecast U.S. growth of minus 0.9 percent next year, but predicted a rebound of 1.6 percent for 2010.

Japan’s Kyodo News said yesterday that Tokyo is considering lowering its GDP growth outlook for its next fiscal year (April 2009 – March 2010) to zero percent.

will71@donga.com