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This year's growth target of 2.8 pct likely to be attained: vice minister

All Headlines 15:23 October 04, 2016

By Kim Boram

SEJONG, Oct. 4 (Yonhap) -- The South Korean economy is expected to attain its 2016 growth target of 2.8 percent in the end despite some downside pressures ahead in the remainder of the year, a vice finance minister said Tuesday.

"Our earlier growth forecast was set at 2.8 percent and the economy has been well following the path for the first three quarters as we've anticipated," Vice Finance Minister Choi Sang-mok said in a luncheon meeting with local media. "Despite many lingering downside risks in the fourth quarter, we can accomplish the goal or closely approach the target line, at least, along with strong fiscal efforts."

South Korea's Vice Finance Minister Choi Sang-mok (R) speaks at a luncheon meeting with local media in Sejong on Oct. 4, 2016. (Courtesy of the Ministry of Strategy and Finance)

According to central bank data, the economy grew 0.5 percent on-quarter in the January-March period and 0.8 percent in the next three months.

Earlier in June, the government revised down its 2016 economic growth outlook by 0.3 percentage point to 2.8 percent, with a 2.7 percent expansion estimated by the International Monetary Fund.

Last year, Asia's fourth-largest economy expanded 2.6 percent annually, decelerating from the previous year's 3.3 percent on-year growth.

Choi said the latest economic data showed that the South Korean economy is in a slight recovery mode on the back of brisk retail sales, although strikes at major carmakers weighed heavily on the production side.

Retail sales rose 6 percent on-year in August as the scorching heat during the summer days boosted purchases of expensive home appliances, such as air conditioners.

Production in the mining, manufacturing, gas and electricity industries rose 2.3 percent in August from a year ago on a gain in mobile chips, largely offset by a drop in car output.

"But for the remaining fourth-quarter, we face some downside pressures such as the ongoing strikes at major carmakers," said the vice minister.

Unionist workers at major auto makers, including industry leader Hyundai Motor Co., have staged a series of partial strikes for months, demanding a wage hike and improved welfare.

A production disruption in the car industry dragged down industrial output by 1.2 percentage points in August, while the walkouts pulled down all exports by 2.6 percentage points last month.

South Korea's outbound shipments came to US$40.9 billion last month, down from $43.4 billion the same month last year. The figure relapsed to negative terrain in just one month, following the turnaround in August that snapped a record 19 straight months of negative growth that began in January 2015.

"To overcome such risks, the government will do its best to execute its planned spending and a supplementary budget as soon as possible," said Choi. "The government will focus more on helping people feel an economic recovery and improvement in their everyday lives."

brk@yna.co.kr
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