South Korea cuts 2013 growth forecast to 2.3 percent
South Korea has lowered its economic growth forecast for the second time in three months as the country's exports continued to decline amid sluggish global demand and a weaker yen.
South Korea's finance ministry said that the country's gross domestic product (GDP) will grow by 2.3 percent in 2013, prompting the government to unveil a stimulus package in April to spur the property market and revive the economy. Analysts estimate the size of stimulus package to be at about 10tn won ($9bn, £6bn).
Three months ago, the ministry projected a growth of 3 percent for the year, while the central bank projected a 2.8 percent growth.
Exports account for almost half of South Korea's GDP, and the recent financial crisis in the eurozone and the US has hurt the demand for Korean products.
In addition, the country is facing stiff competition from Japan which is benefiting from a weak yen. The weakness of the currency has helped Japanese manufacturers, such as Toyota Motor Corp.
The yen has dipped about 20 percent against the US dollar since November last year, making Japanese exports cheaper to foreign buyers. Meanwhile, the Korean won gained by about 10 percent against the US dollar, making the country's products more expensive to foreigners.
South Korea recorded a 2 percent growth in 2012, the slowest pace in three years due to weak exports, facility investment and private spending.
In order to tackle the low-growth situation, the county proposes a supplementary budget to encourage property sales and 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.
In 2012, the government announced two separate stimulus measures worth $12.2bn in an attempt to revive economic growth.
Given the low rate of inflation, the Bank of Korea is expected to cut its policy rate after keeping the rate at 2.75 percent for a fifth consecutive month.
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