Looking forward, 2013 will see the beginning of a recovery, which
will gain traction as the global recovery finds its footing in 2014. GDP
growth is likely to improve modestly to 2.8% in 2013 from 2.0% in 2012.
A full-fledged recovery will have to wait until 2014, when GDP growth
will strengthen to 3.7% (F...
igure 3.11.6). While domestic demand will
contribute to growth in 2013, it will be nowhere near robust enough to
qualitatively change the gradual and limited nature of recovery in 2013.
Uncertainties in the global outlook regarding the advanced economies
will continue to cast a dark cloud over global trade during the first half.
But those uncertainties are expected to ease during the second half. The
Republic of Korea’s performance will mirror the expected trajectory of
the world economy, with growth in the second half of the year slightly
outperforming expansion in the first half.
Merchandise export growth is set to rise modestly from 0.1% in 2012
to above 7% in 2013, as factors contributing to faster growth are likely to
outweigh those depressing it. Stronger export growth since the fourth
quarter of 2012 buttresses such cautious optimism. Exports to the PRC
stand to benefit from that country’s widely expected stronger growth.
On the other hand, limited fiscal stimulus in developing countries and
fiscal austerity in the advanced economies will firmly cap aggregate export demand (Figure 3.11.7). Export growth will thus be muted overall— unlike the V-shaped rebound after the global financial crisis—but will mark an exit from the export distress of 2012. Meanwhile, imports are likely to rise in 2013 and 2014, reflecting strengthening domestic demand,
and shrink the current account surplus to 3.0% of GDP in 2013 and 2.5%
of GDP in 2014.
In line with the trajectory of the global outlook, investment will contract in the first half but grow at a healthy pace of 3.0% or better in the second half, on the back of growing outlays in export-oriented
industries and sectors. The effect of exports on equipment investment,
traditionally high for this export-dependent country, is likely to be acute.
Uncertainty in the post-crisis period encouraged firms to base their
investment decisions more on visible short-term export trends than on
highly uncertain long-term prospects. Looking forward, while business
confidence remains fragile, low interest rates, the strong won, and
tightening capacity utilization in recent months will provide impetus to
investment (Figure 3.11.8)
Sources: Bank of Korea. Economics Statistics System. http://ecos.bok.or.kr/EIndex_en.jsp (accessed 24 January 2013); ADB estimates, Data Company (accessed 8 March 2013)
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