South Korea cuts 2008 GDP growth forecast, citing oil

South Korea’s Finance Ministry lowered this year’s economic growth forecast to take account of higher oil prices and the likelihood of slowing exports.

The $887 billion economy will expand at a “upper 4 percent” pace in 2008, down from a previous forecast of 5 percent, Finance Minister Kwon Okyu said at a briefing in Gwacheon last week. His comments were embargoed until Tuesday.
Increasing oil prices are fanning inflation and boosting costs to businesses and consumers in an economy that imports 97 percent of its energy needs. Exports may slow as the U.S. housing recession cools the expansion of the world’s biggest economy, damping global growth.

“Our external conditions will be tougher than in 2007,” Kwon said. “Downside risk factors such as high oil prices and the U.S. sub-prime problem are increasing.”

Inflation is becoming a “burden” for the government, Kwon said. The central bank should closely check prices and economic and financial market conditions to “flexibly” manage its interest rate policy, he said.

Tehran Times