S Korea brings down 2016 growth forecast to 2.8%

S Korea brings down 2016 growth forecast to 2.8%

Seoul, June 28 (IANS) South Korea’s Finance Ministry on Tuesday revised its GDP growth forecast for 2016 downward by three-tenths, to 2.8 percent, in line with most other predictions, and announced an imminent fiscal stimulus package to revitalise the economy.

In the report, the ministry which had upheld the estimate at 3.1 per cent so far, said the country is facing a decline in national production as well as foreign demand, besides confronting uncertainties over Britain’s decision to leave the European Union (EU), EFE news reported.

The 2.8 per cent growth forecast for the current year is in keeping with the figures published by the Bank of Korea in April, and is one tenth higher than the 2.7 per cent projected by the International Monetary Fund.

In a statement, the Seoul ministry said the economy may lose steam in the second half of the year owing to export slowdowns and the end of tax reduction programs.

In a bid to tackle the slowdown, the ministry also announced it is preparing a fresh stimulus injection of $17 billion, using tax revenue surplus and state funds.

Although its exact volume will be determined only after further consultations with Parliament, the government said approximately half the amount – $8.5 billion – will be allocated as additional budget spending through state corporations.

The South Korean economy, which has a high degree of export-dependence, has seen growth slowing in recent months as overseas trade declined due to falling internal and external demand.

Last year, South Korean GDP grew 2.6 per cent, its lowest since 2012.

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