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| Federal Reserve Board Chair Jerome Powell speaks during a news conference at the Federal Reserve in Washington, D.C., Feb. 1. AFP-Yonhap |
The Korea Development Institute (KDI) on Thursday maintained Korea's growth outlook for this year at 1.8 percent, but said it will depend on the scope of U.S. rate hikes and China's economic growth.
The state-run think tank suggested Asia's No. 4 economy will expand by 1.1 percent in the first half of 2023, followed by an improved 2.4 percent growth in the July-December period.
"While our economic growth outlook for 2023 remains unchanged (from November), it is expected to slow at a wider margin in the first half, while recovering faster in the latter half," the KDI said.
The KDI added the recovery, however, can be delayed if China posts weaker-than-expected economic growth, or if the U.S. maintains its monetary tightening policy.
Earlier this month, the U.S. Federal Reserve raised its benchmark rate by 25 basis points to a target range of 4.5 to 4.75 percent. In a statement, the Federal Open Market Committee said, "Inflation has eased somewhat but remains elevated.
"If a slowdown in the inflation is limited due to the crisis in Ukraine, the global economy may face a volatile financial market, with the monetary-tightening stance being further strengthened, led by the U.S.," it added.
Domestically, the think tank expressed concerns that the recent slump in the property market may have an adverse effect on the real economy, limiting the growth in private consumption and construction investment.
The KDI estimated Korea's annual inflation at 3.5 percent, which is up 0.3 percentage point from the previous estimate. The country's inflation came to 5.1 percent in 2022.
The institution said the adjustment came despite the recent decline in global crude prices, as they are reflected on the utility bills with a lag. (Yonhap)
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