Global Investment Banks And Economic Research Agencies Predict South Korea’s Growth To Slide To The Upper 2 Percent In 2016

by Diana Tomale / Nov 18, 2015 08:48 PM EST

(Author: Kaflan) Bank of Korea revised down forecast of South Korea's growth in 2016 from 3.3 percent to 3.2 percent. Investment banks and economic research agencies overseas predict growth will slide upper 2 percent next year.

The Bank of Korea (BOK) recently revised its forecasts of South Korea's growth in 2016. Xinhua Net forecasted Oct. 15 that the revision was due to the existing external risks which include the possible interest rate increase in the United States and the economic deceleration in China.

BOK Governor Lee Ju Yeol revealed that the central bank changed its prediction of the country's growth in 2016 to 3.2 percent from the previous of 3.3 percent. Aside from that, BOK also made a revision on this year's growth forecast to 2.7 percent from 2.8 percent.

Governor Lee said the revisions came after the Middle East Respiratory Syndrome (MERS) hit the country in May and affected the second-quarter growth of South Korea.

Meanwhile, global investment banks and economic research agencies predicted that South Korea's growth next year will reduce to the upper 2 percent range, according to a report by Yonhap News Agency published on Oct. 26.

The latest Consensus Economics report shows that global investment banks and economic research agencies anticipate that South Korea's growth next year will be at around 2.9 percent, which is evidently lower than BOK's forecast of 3.2 percent.

An analyst from Samsung Securities Co. said South Korea's growth predictions "took a hit as think tanks and IBs are forecasting tough times ahead."

"There have been uniform downgrades compared to September for most key economies, although the drop in South Korea's is relatively steeper than others," said Lee Seung Hoon.

The recent report by the Consensus Economics also shows that China's gross domestic product (GDP) growth will fall to 6.5 percent next year from the previous forecast of 6.6 percent.

Surveys conducted by around 700 analysts working for investment banks and economic research agencies overseas was the basis for the latest report from the Consensus Economics.

Moreover, other companies such as Morgan Stanley, BNP Paribas, Nomura and ING predict that South Korea's growth will dip below 3 percent in 2016.