S Korea's central bank raises economic growth forecast to 5.9%

12 July 2010 10:08  [Source: ICIS news]

SINGAPORE (ICIS news)--South Korea’s central bank on Monday raised its forecast for the country’s economic growth in 2010 to 5.9% from an earlier estimate of 5.2% on the back of improved exports and capital spending.

"The Korean economy is expected to maintain its upward trend into next year,” the Bank of Korea (BOK) said in a statement.

The revised projection was in contrast with the previous year when the country recorded growth of just 0.2%.

"Goods exports and facilities investment are forecast to maintain strong growth owing to stronger recovery of the global economy, [a] favourable IT industry and demand for changes in production facilities,” the central bank said.

Goods exports would rise 26.4% in 2010, more than an 18.6% increase estimated in April, the statement said.

Overseas shipments had jumped 32.4% in June from a year ago, according to the central bank.

BOK’s revised assessment came after the South Korean government raised in July, its economic growth forecast for this year to 5.8% from 5%.

The International Monetary Fund had also recently upped its growth forecast for the South Korean economy to 5.75% in 2010, from its previous forecast of 4.5%

The BOK said that growth was expected to slow down to 4.5% in 2011.

Meanwhile, the country’s current account surplus was expected to be halved to $21b (€16.6bn), in 2010, from last year’s $42.7bn, the bank said.

“The current account surplus will shrink relatively quickly owing to the widened services deficit on services account and the increase in imports following domestic demand recovery,” BOK said.

The surplus would also likely narrow to $11bn in 2011, the bank added.

Korea's petrochemical industry was the world's 5th biggest based on ethylene capacity in 2009, according to Korean Petrochemical Industry Association.

($1 = €0.79)

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By: Nurluqman Suratman

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