S. Korean economy could grow 3.6 % next year

The South Korean economy could grow 3.6 percent in 2012, down from 3.8 percent growth estimated for this year, as global economic uncertainties affect exports, a private think tank said Thursday. In its outlook for next year, LG Economic Research Institute (LGERI) said the export of durable goods and related parts could lose steam, as developed countries cut down on their consumption of such products in the wake of the global economic downturn, it said. The finance ministry earlier had predicted that Asia's fourth-largest economy would grow 4.8 percent in 2012, with the country's gross domestic product gaining 4.5 percent for this year. LGERI predicted exports may expand by 9.4 percent next year, less than half of this year's forecast rate of 20.9 percent. It added that on the domestic front, government's efforts to arrest the rise in household debts through a spending cut will likely cause contraction in demand. Such developments can negatively impact the overall economy, but they will improve the economic health in the long-term, it said. Ballooning household debt tallied at 876.3 trillion won (US$825.1 billion) as of late June has emerged as a major drag on the economy. The think tank, meanwhile, said the employment market is expected to get grimmer in 2012, as the manufacturing sector, which provides a large portion of the country's jobs, has not expanded recruitment. This trend will likely continue into next year, it added. Consumer prices will settle at around 3 percent levels next year, while the won's exchange rate will hover at an average of 1,105 won against the U.S. dollar this year, and 1,070 won in 2012, the report said.