Korea's economy forecast to grow 3.7 pct next year: think tanks

SEOUL, Nov. 23 (Yonhap) -- South Korea's economy is expected to grow in the 3-percent range next year amid worries over deepening eurozone debt problems, major think tanks and other financial institutions said Wednesday.

According to growth forecasts provided by 19 think tanks, investment banks and securities firms, South Korea's economy is expected to expand 3.7 percent on average next year.

This would the second straight year that economic expansion has stood below the nation's potential growth rate of 4 percent. Their growth forecast for this year is the same 3.7 percent.

The state-run think tank, the Korea Development Institute, predicted growth of 3.8 percent, while the Korea Institute of Finance forecast the economy will expand 3.7 percent.

Private-sector think tanks painted a relatively gloomy picture of Asia's fourth-largest economy. Samsung Economic Research Institute and LG Economic Research Institute predicted 3.6 percent growth.

Of foreign investment banks, UBS forecast a 2.8 percent expansion, while Nomura Securities predicted 5.8 percent growth. Goldman Sachs, BNP Paribas, Barclays and Morgan Stanley all forecast growth in the 3-percent range for next year.

The forecasts are lower than the government's earlier 4.5 percent growth outlook. The central bank expects the economy to expand 4.6 percent next year.

The relatively lower growth outlooks come amid worries hanging over the eurozone debt problems and the pace of economic recovery in some advanced countries.

Most of those institutions surveyed say that the South Korean economy will be affected by such external risks up until the end of the first half of next year. They forecast that growth will pick up some steam from the second half.

Skeptics still worry that things might not improve anytime soon for the export-driven Korean economy if the eurozone debt problems remain unresolved and lead to a global crisis.

"It would be inevitable for the Korea! n econom y to be determined again by external factors next year," Kwon Soon-woo, a senior economist at Samsung Economic Research Institute, said. "Even the economies of advanced nations including the U.S. cannot be immune from the eurozone problems." (Yonhap)