The South Korean economy is forecast to grow in the range of 3 percent for a second consecutive year in 2018 on a recovery in private consumption, a state-run think tank said on Monday.

According to a 2018 economy and industry forecast report by the Korea Institute for Industrial Economics and Trade (KIET), Korea’s real gross domestic product (GDP) is expected to expand 3.0 percent next year - down 0.1 percentage point from the 3.1 percent growth forecast for this year but still in the 3 percent range for a second consecutive year. The think tank projected the economy to grow 3.0 percent in the first half of 2018 and 2.9 percent in the second half.

The growth forecast for the local economy is in line with the estimates by the Korean Ministry of Strategy and Finance and the International Monetary Fund, but higher than the average 2.8 percent outlook presented by nine major overseas investment banks.

In 2015 and 2016, the Korean economy expanded 2.8 percent, respectively, growing below 3 percent for two straight years.

The think tank expected the country’s exports and overall investment would slow down in 2018 after expanding significantly this year, but private consumption should recover as the new government’s policy supports are expected to help improve income and labor conditions.

Private spending is projected to rise 2.7 percent next year, up 0.4 percentage point from this year’s 2.3 percent.

The think tank expected household debts would remain high next year, but the PyeongChang Olympics scheduled in the first half of 2018 and various government policies to focus on creating jobs and hiking the country’s minimum wage should offset the issue and help to keep the country’s economy float.

By Kim In-oh and Lee Eun-joo

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