S. Korea's growth rate forecast to slow to 1.4 pct in 2023: think tank

SEOUL, Dec. 27 (Yonhap) -- South Korea's economic growth rate is expected to slow to 1.4 percent in 2023 amid slumping exports and sluggish domestic demand, a leading think tank said Tuesday.

Asia's fourth-largest economy is projected to expand 1.6 percent on-year in the first half of next year and 1.3 percent in the latter half, according to LG Business Research.

The full-year projection is down from the think tank's growth estimate of 2.5 percent for this year.

The institute, affiliated with No. 4 conglomerate LG Group, predicted South Korea's exports to increase only 0.8 percent in 2023 from this year.

"South Korea's export growth is likely to fall to the zero percent range in the coming year amid a global economic downturn, with its trade balance remaining in the red for a prolonged period," it said.

The growth rate in private consumption is projected to slow to 2 percent from 4.3 percent, with corporate capital spending and construction investment forecast to shrink 2.5 percent and 0.2 percent, respectively.

The think tank also expected South Korea to go through so-called stagflation, or a mix of slumping growth and high inflation.

South Korea's consumer prices are estimated to rise 3.8 percent on-year in 2023, lower than this year's forecast of 5.1 percent but much higher than the central bank's target of 2 percent.

"Despite an economic slowdown, high consumer prices will likely last due to rising service rates and hikes in public utility rates, which have long been delayed," the institute said.

It further said South Korea is expected to face three unfavorable external conditions of a weak local currency, Sino-American conflict and high raw material prices.
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