As skepticism prevails over the Korean economic outlook for next year due to political insecurity added to economic woes at domestic and external front, state-run think tank Korea Development Institute (KDI) sharply revised down forecast on the nation’s economic growth for next year to 2.4 percent from 2.7 percent.

The KDI announced on Wednesday that it kept its economic growth forecast for this year unchanged at 2.6 percent but turned bleaker about next year. The government targets annualized growth of 2.8 percent for this year and 3.0 percent for next year. It expected to revise down the estimates soon.

The state think tank’s gloomier outlook is in line with similar harbinger for a worse year to come from other institutions at home and abroad.

The Bank of Korea predicts a growth of 2.8 percent for next year for now, but is expected to slash the figure in next outlook. While being upbeat about most advanced economies, the Organization for Economic Cooperation and Development (OECD) downgraded Korea’s outlook for 2017 to 2.6 percent. Hyundai Research Institute bets 2.6 percent and Korea Institute of Finance 2.5 percent, and LG Economic Research Institute and Korea Economic Research Institute each at 2.2 percent.

The policy institute may have to further downgrade the outlook as political insecurity from the lengthy lapse in state leadership as a new administration could be installed only after impeachment against scandal-ridden President Park Geun-hye is endorsed by the Constitutional Court even after the motion passes the legislative. Economic activities could be stalled, further aggravating weak domestic demand.

“External risks rose since our last outlook in May following the British decision to exit the European Union and the U.S. election result that placed an unconventional candidate as the new U.S. president,” said Kim Sung-tae, chief researcher of the KDI’s macroeconomic research department. But he said unless external factors turn dramatically for the worse, Korea’s growth pace won’t likely fall below 2 percent solely on domestic factors,” he said.

By Kim Gyu-sik

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