South Korean economy expected to grow 3.5%

The South Korean economy was expected to grow 3.5 percent next year, much lower than the forecast of the country's finance ministry and the central bank, the parliamentary budget office said Monday. The Asia's No.4 economy was estimated to expand 3.5 percent in 2014 after growing 2.6 percent in 2013, according to the report by the National Assembly Budget Office. The reading was much lower than estimated made by the Ministry of Strategy and Finance and the Bank of Korea (BOK). The Ministry of Strategy and Finance revised down its 2014 growth outlook to 3.9 percent in its budget plan for next year, while the Bank of Korea, or the central bank, was widely expected to downgrade its growth outlook from the current forecast of 4 percent. The economy was estimated to grow at an annual average rate of 3.5 percent for five years through 2017, much lower than 4.3 percent recorded during the pre-crisis period of 2003 to 2007, the budget office said. The downgraded forecast was attributed to the tapering of U.S. bond purchases and China's turn to qualitative growth rather than a quantitative one, which would negatively influence on exports, which account for around half of the economy. The U.S. and China are the top two export destinations of South Korea. Mounting household burdens for debt repayment and worsening conditions for employment and investment for companies would dampen domestic demand down the road, the budget office said.