By Cheon Jong-woo
SEOUL, Dec 11 (Reuters) - South Korea's economy will probably grow in 2009 at its slowest clip in 11 years due to a deepening global downturn, with the growth rate slowing to less than half the pace seen three months ago, a Reuters poll showed.
Asia's fourth-largest economy will recover some momentum in 2010 on the back of various domestic and global stimulus measures but will perform far below levels since in recent years, the survey of 10 economists suggested.
The poll was conducted before Bank of Korea slashed its key rate by a record one percentage point to 3.0 percent, a record low, to help the economy avoid sliding into its first recession in a decade.
The economy will probably grow 2.1 percent next year, marking its worst performance since a 6.9 percent fall in 1998 in the wake of the Asian financial crisis. Growth is expected to pick up to 3.8 percent in 2010, still below the 5 percent pace recorded in the past two years, median forecasts from the survey showed.
In the previous poll published in late September, economists had forecast that South Korea's economy would expand 4.6 percent in 2009.
The finance ministry aims for 2009 growth of around 4 percent after a projected 4.7 percent expansion this year, but several officials have admitted that the ministry's forecast may turn out to be too optimistic.
"Actually, I may have to lower the growth forecast further as we have not seen a bottom yet. Whenever I make a new forecast, I see fresh bad factors," said Oh Suk-tae, an economist at Citigroup, who has a 2.0 percent forecast for 2009.
Exports, which have been a main engine for the country's economic growth, are cooling, reflecting a slump in global demand.
Weaker exports and the global financial turmoil will squeeze an already subdued domestic demand even further next year, economists said.
With the economy losing momentum quickly, the Bank of Korea is expected to keep cutting interest rates in months ahead in addition to 225 basis points of easing since early October.
Despite rate cut expectations, the won currency
Results of the latest survey conducted last week:
GDP CPI TRADE BAL
pct pct US$ bln
2009 2010 2009 2010 2009 2010
HSBC -0.6 4.6 2.6 3.6 6.0 19.9
HMC Investment 1.2 3.8 2.9 2.5 6.9 11.1
DBS Bank 1.4 ~ 2.2 ~ 18.0 ~
SC First Bank 1.4 2.6 2.9 3.4 8.3 12.3
Citigroup 2.0 3.8 3.0 2.5 11.2 10.0
NH Investment 2.2 3.5 3.2 2.8 10.7 11.0
SK Securities 2.4 3.6 3.1 3.3 3.0 4.5
HI Investment 2.4 4.0 3.7 3.2 6.0 7.0
Hana Daetoo 2.5 4.5 2.7 3.0 3.5 5.5
Goodmorning Shinhan 3.2 4.9 3.2 2.8 10.7 11.0
------------------------------------------------------------
Median 2.1 3.8 3.0 3.0 7.6 11.0
~ no forecasts
Forecasts for the won per dollar
End-June 2009 End-Dec 2009 Hana Daetoo 1,150 1,050 NH Investment 1,150 1,050 SK Securities 1,160 1,140 HI Investment 1,200 1,100 SC First Bank 1,250 1,150 Citigroup 1,300 1,250 DBS Bank 1,350 1,200 Goodmorning Shinhan 1,350 1,100 HMC Investment 1,350 1,300 HSBC 1,400 1,200 ------------------------------------------------- Median 1,275 1,145
Forecasts made in previous Reuters surveys:
GDP CPI TRADE BAL
pct pct US$ bln
2009 2010 2009 2010 2009 2010 Sept 2008 4.6 n/a 3.4 n/a 3.3 n/a July 2008 5.0 n/a 3.4 n/a 8.5 n/a March 2008 5.0 n/a 3.0 n/a 5.7 n/a
Historical data:
GDP CPI TRADE BALANCE
pct change on pvs yr pct US$ bln 2007 5.0 2.5 14.6 2006 5.1 2.2 16.1 2005 4.2 2.8 23.2 2004 4.7 3.6 29.4 2003 3.1 3.5 15.0 ---------------------------------------------------------- 5-yr average 4.4 2.9 19.7