LG Economic Research Institute slashed South Korea’s economic growth outlook for this year by 0.2 percentage point to 2.3 percent, the lowest among local think tanks, citing a gloomy outlook on the country’s export amid a slowdown in the global economy.

In its growth outlook report released on Sunday, the private economic research institute revised down its forecast for Korea’s gross domestic product (GDP) growth for 2019 from its previous forecast of 2.5 percent to 2.3 percent.

The national economy is on its worst downward spiral since the 2008-2009 global financial crisis, it added.

The major culprit behind the bleak outlook on the country’s economy is a contraction in the country’s exports without a sign of immediate recovery, the research institute said. The global economic slowdown has dented the country’s exports, and the growing pessimism about the fourth industrial revolution has further reduced demand for memory chips that account for the bulk of the export-reliant Korea’s entire outbound shipments.

The institute expected that Korea’s exports would not recover in the second half of this year.

Due to the likely weak exports, the country’s facility investment is forecast to continue to fall this year, boding ill for the country’s job market, LG Economic Research said. The country’s latest job addition above 200,000 was not driven by a recovery in the economy, it noted, adding that the struggling manufacturing sector will delay any significant improvement in the job market for a while.

LG Economic Research’s gloomy outlook on the country’s economy is in line with other state-run and private research institutes in the country.

The Bank of Korea last week cut its outlook for this year’s economic growth to a seven-year low of 2.5 percent from the previous forecast of 2.6 percent. State-run think tank Korea Development Institute (KDI) earlier this month declared the economy was “slumping”, worsening from a “weakening” trend. KDI, Korea Institute of Finance and Korea Capital Market Institute are expected to downgrade their estimate next month from their previous forecast of an averaged 2.6 percent.

By Kim Yeon-joo and Lee Ha-yeon

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