Global credit rating setter Moody’s Investors Service revised down its outlook for South Korea’s economic growth for 2019 and 2020, its latest report showed Monday. “We forecast real GDP growth in South Korea slightly above 2 percent in both 2019 and 2020, markedly lower than the 2.7 pct growth in 2018,” Moody’s said in “Global Macro Outlook 2019-2020.” It put the 2019 outlook at 2.1 percent while giving a 2.2 percent growth outlook for next year, revising down from the 2.3 percent and 2.5 percent growth outlooks it gave for 2019 and 2020 in its previous report in November last year.

“The weakening of the investment cycle and the deceleration in global trade have hurt economic momentum. Subdued demand for intermediate products from China, especially semiconductors, has had an adverse impact on exports as well as on the investment outlook,” Moody’s said. “A minimum-wage increase is largely blamed for the lackluster employment growth, with small businesses viewing the hikes as a challenge to their competitiveness.”

Still, the South Korean government’s policy efforts will partially help bolster the economy, it said. “On the policy front, the expansionary fiscal and momentary policy will partially offset the impact of deteriorating domestic and external conditions,” according to the report. “High household debt above 160 percent of disposable income is constraining the outlook for consumer spending. However, the higher minimum wages will support consumer spending, as will better job prospects if fiscal measures work,” it added.

(Yonhap)