The European Chamber of Commerce in Korea published a great article by Mr. Chang-mok SHIN of the Samsung Economic Research Institute. The article is very useful for companies wishing to establish an business in Korea and have based their feasibility study on less reliable forecasts. SERI is not perfect, but they tend to be neutral and candid.
Mr. Shin predicts, in short, that:
- Korean Growth Rate in 2011 will be 3.6%. This “low growth” rate will be caused by the European debt issues, a slowing economy in Europe, and that the Korean government is unable to further stimulate the economy because of a high (recently increasing) sovereign debt and the inability to consider quantitative easing because of, already, high inflation.
- Korean Private Growth in Consumption will increase by 2.7 percent and Consume Prices will increase by 3.4 percent from 4.4 percent. This lower than normal consumption growth is caused by “slower income growth, high inflation and an economic slowdown.”
- Korean Facilities Investment will grow to 4.5 percent (6.7 percent in 2011). “Strong exports of information technology products and automobiles have contributed to a favorable investment climate, but both products will inevitably face declining outbound shipments going forward.”
- Korean Export Growth will decrease to 11.9 in 2012 from 20.9 percent today. Same basic reasons as above.
- Korean Won will strengthen to 1,060 to the U.S. dollars.
The full report can be found in the December 2011 issue of Infomag. Infomag is the monthly magazine of the European Union Chamber of Commerce.
What do you think?
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