Financial Research Institute, downward revision to 2.6%of economic growth forecast this year

The Korea Financial Research Institute lowered its economic growth forecast this year from 3.2%to 2.6%.

The Financial Research Institute announced on the 16th the ‘2022 revision economic outlook’.

It has been six months since the economic growth forecast this year was announced in November last year. It is expected that global growth will slow down in the second half of the year, and the overall growth will slow down due to rising interest rates and continuing high prices.

Private consumption expenditure growth was expected to be 3.6%. Although faster social distance cancellation will contribute to the increase in private consumption, the increase in loan rates and overall inflation will be a constraint of private consumption.

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Construction investment is a downside factor of growth because it is delayed than expected at the beginning of the year due to factors such as supply disruption and rising costs. Exports are expected to slow down significantly due to the blockade of China’s economic blockage, the Ukrainian war, and the expansion of international financial market volatility.

Facility investment growth is expected to record 1.5%. Following last year, the company’s global semiconductor industry will continue to expand, and in line with this, Korean companies are expected to maintain an increase in facility investment this year.

Construction investment growth will reach -1.1%, according to the Korea Institute of Finance. Nominal ready -made and nominal construction investments have risen steadily due to the increase in private and public construction orders since the second half of 2019, but the performance of actual construction investment is low due to the surge in related price indexes such as producer price indexes.

As related inflation, such as the producer price index, is expected to continue for the time being, the gap between the construction market and the actual construction investment performance, which is felt by related indicators, is expected to continue this year.

Total exports are expected to slow down to 3.9%. Global demand will weaken due to the slowdown in Europe due to the Ukrainian war, interest rate hikes in the US Federal Reserve (Fed, Fed), and financial insecurity for emerging countries due to strong dollars and high prices.

This year, the annual consumer price increase rate will be very high at 4.1%. Since last year, supply -side consumer prices have been on the rise due to rising raw material prices and disruptions of supply chain, and this year, despite the increase in costs, the price increase has been expanded due to the sluggish demand due to Corona 19.

This year’s won -dollar average exchange rate was 1,220 won higher than last year’s 1,145 won. This year, the Fed has maintained its rise due to accelerating monetary tightening, preferences of safety assets due to war, and deteriorating trade balance in Korea due to raw material prices.

However, the Financial Research Institute forecasts that additional risks of won -dollar exchange rate will be rising, such as expanding geopolitical risks, continuous inflation pressure, and plunge in the yuan value.

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