(Photo= Yonhap news)

[Alpha Biz= Reporter Paul Lee] The Korea Institute of Finance raised its economic growth forecast for Korea to 2.5% this year. It is expected that the recovery will take place as export performance improves mainly in semiconductors and related facility investment increases.

On the 12th, the Korea Institute of Finance raised its economic growth forecast for this year by 0.4 percentage point (p) from 2.1 percent to 2.5 percent through the "2024 Revised Economic Outlook."

The institute forecast a 5.3 percent growth in total exports. It is more than double the forecast of November last year (2.6%). The growth rate of facility investment is expected to be 3.7%. This is due to the rebound in semiconductor-related facility investment due to demand for memory semiconductors and demand for expansion of high-bandwidth memory production facilities.

The growth rate of private consumption is expected to be 1.7%, lower than last year's forecast of 2.0%. It is predicted that consumption capacity will be limited due to prolonged high prices and high interest rates, which will show a modest growth rate throughout the year. Construction investment is also expected to fall 2.4 percent, the report showed.

The growth rate of consumer prices is expected to reach 2.7% annually. Consumer prices fell during the second half of last year, but are rising again to around 3% this year due to unstable raw material prices due to increased geopolitical risks in the Middle East and soaring prices of fresh foods such as fruits.

The average annual interest rate on three-year treasury bonds is expected to fall slightly on-year to 3.4 percent. Domestic interest rates are also expected to stabilize downward as expectations for a key rate cut by the U.S. Fed have been strengthened since the second half of the year.

 

 

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