The Bank of Korea has downgraded Korea's economic growth outlook for this year yet again from the initial 2.9 percent to 2.7 percent in just three months. The bank has also lowered the projected economic growth rate for next year by 0.1 percentage points to 2.7 percent.
Both Samsung and LG, the two pillars of Korea's display industry, have postponed their plans to invest in mobile components from the second half of this year to next year. The two corporations cited stagnation in the smartphone market. As such, the sluggish display sector and concerns regarding semiconductor oversupply have dealt a blow to domestic exporters' facility investment plans. The Bank of Korea cited sluggish investment as the primary reason behind its decision to cut the nation's economic growth outlook. For the very same reason, the bank has also lowered the projected employment growth in 2018 to 90,000 jobs, less than a third of the projected figure released early this year. The ongoing trade war between the United States and China and the global financial uncertainty stemming from the latest interest rate spike in the U.S. are also contributing to the economic woes.
[Soundbite] Lee Ju-yeol(Governor, Bank of Korea) : "There have been various external risk factors, which have now surfaced and are fusing together to create uncertainty."
Korea's export forecast for next year is also bleak. Analysts say that Korea's export growth will likely slow down compared to this year, as the trade war between the United States and China will begin to affect business performance early next year, undermining growth of the world's major economies. The Bank of Korea said that although the Korean economy will continue to expand in line with its potential growth rate, employment and exports -- the barometers of the substance and quality of economic growth -- should be monitored closely.