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South Korea lowers growth forecast as exports slow | |
(35 minutes later) | |
South Korea has cut its growth forecast for the second time in three months, amid a slowdown in its exports. | South Korea has cut its growth forecast for the second time in three months, amid a slowdown in its exports. |
The finance ministry now expects the economy to grow by 2.3% in 2013, down from its earlier projection of 3%. | The finance ministry now expects the economy to grow by 2.3% in 2013, down from its earlier projection of 3%. |
Exports, which account for almost half of South Korea's overall output, have been hit by weak demand from markets such as the US and the eurozone. | |
The ministry said that it would unveil a series of stimulus measures in the coming days aimed at reviving growth. | |
South Korea's economy expanded by 2% in 2012, the slowest pace in three years. | |
Double whammy | Double whammy |
South Korea's exports have also come under pressure from the recent weakness in the Japanese currency. | South Korea's exports have also come under pressure from the recent weakness in the Japanese currency. |
The yen has dipped nearly 20% against the US dollar since November last year, making Japanese goods more affordable to foreign buyers. | The yen has dipped nearly 20% against the US dollar since November last year, making Japanese goods more affordable to foreign buyers. |
Meanwhile, the South Korean won has risen by nearly 10% against the US dollar since May, making South Korean goods more expensive. | |
There are concerns that with Japan and South Korea competing in similar markets, South Korean goods may lose out as a result of fluctuations in the currency. | |
Stimulus measures | |
Meanwhile, policymakers have found it tough to boost domestic consumption in South Korea, which has also affected growth. | |
The ministry said that it would unveil stimulus measures, including a proposal for an additional supplementary budget and steps to spur the property market, to try to boost domestic spending. | |
"The government has decided to act in a more pre-emptive manner in response to the heightened macroeconomic uncertainties," said Choi Sang-mok, director general at the ministry. | "The government has decided to act in a more pre-emptive manner in response to the heightened macroeconomic uncertainties," said Choi Sang-mok, director general at the ministry. |
Though the government did not give any details on the size of the budget, some analysts said it was likely to be about 10 trillion won ($9bn; £6bn). | |
Last year, the government announced two separate stimulus measures worth $12.2bn in an attempt to spur economic growth. | Last year, the government announced two separate stimulus measures worth $12.2bn in an attempt to spur economic growth. |
The measures included tax breaks on purchases of homes and cars. |