“South Korea lowered its growth forecasts for this year and for 2013 in the first revisions since a new president was elected on Dec. 19.
Gross domestic product will expand 3 percent next year, the Finance Ministry said in a statement in Sejong, less than the 4 percent predicted in September. Growth may be 2.1 percent this year, versus a previous 3.3 percent estimate.
The update brings the government’s forecasts closer to those of private economists and the central bank as Europe’s debt crisis caps demand for the nation’s exports. The pace of expansion next year may partly depend on the extent of any extra spending by president-elect Park Geun Hye, who will take office in February.
“Downside risks from Europe are bigger than anticipated,” said Choi Sang Mok, a director general at the ministry.
The Kospi index of stocks fell 0.3 percent as of 1:43 p.m. in Seoul, paring gains for the year to 8.3 percent. The won appreciated 0.1 percent to 1,072.00 per dollar, according to data compiled by Bloomberg, with this year’s 7.5 percent advance the biggest among Asia’s 11 most-traded currencies.
The Bank of Korea said today that it will support the recovery while also examining possible economic imbalances “arising from the extended duration of its accommodative monetary policy stance.”
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