2024-04-27 22:35:00
Click to enlarge the image Panoramic view of the Ministry of Strategy and Finance. Provided by the Ministry of Strategy and Finance
Update on “economic policy direction for the second half”… It is essential that growth slows or reverses in the second quarter.
The average forecast of domestic securities companies is 2.1 → 2.4%… Median IB abroad 2.0 → 2.5%
As the economic growth rate in the first quarter of this year far exceeded expectations, the government also adjusted its annual “growth standard” upwards.
The 2.2% rate increase suggested in the economic policy orientation at the start of the year is considered a fait accompli.
Revisions to the growth rate are expected to be presented in the “Economic Policy Guidance for the Second Half of 2024”, which is usually carried out at the end of June, following reviewing the real economy in April and May.
According to the Ministry of Strategy and Finance, on the 28th, there appears to be broad consensus on a significant increase in annual growth rate forecasts.
Indeed, real gross domestic product (GDP) in the first quarter of this year increased by 1.3% (preliminary value) compared to the previous quarter, exceeding the market consensus (0.6%).
It was reported that the Ministry of Strategy and Finance had initially proposed an annual growth rate of 2.2% under a scenario in which GDP would grow by around 0.5-0.6% per year. quarter.
Just exceeding growth by 0.7 to 0.8 percentage points in the first quarter has the effect of naturally increasing the annual growth rate.
Internally, the Ministry of Strategy and Finance estimates that the annual growth rate will exceed 2.5%, despite the different expected trajectories. This means it stays open until the end of the 2% range.
Even in the extreme scenario where “zero growth” continues at 0% in the second and fourth quarters, the annual growth rate is estimated at around 2.3%.
The prospects of domestic and foreign investment sectors are no different.
On the 25th and 26th, the average annual growth rate predicted by research centers of 10 domestic securities companies (Korea Investment, SK, KB, Hana, Meritz, Eugene Investment, Sangsangin, Samsung, Hi Investment and Shinhan Investment) was by 2.4%. .
This figure was adjusted upwards by 0.3 percentage points from the forecast just before the GDP announcement for the first quarter of this year (average 2.1%).
According to the Center for International Finance, the median forecast of global investment banks (BIs) also increased by 0.5 percentage points, from 2.0% to 2.5%.
Barclays increased it significantly, from 1.9% to 2.7%. JP Morgan adjusted upwards from 2.3% to 2.8%, Goldman Sachs adjusted upwards from 2.2% to 2.5% and BNP adjusted upwards from 1.9% to 2.5%, 5%.
The Ministry of Strategy and Finance plans to update the annual growth forecast at the end of June, or at the beginning of July at the latest, taking into account indicators of industrial activity and trends in exports and imports for April and May.
The key is whether growth will reverse in the second quarter.
Due to the base effect of the surprising growth in the first quarter, a significant adjustment of the growth rate in the second quarter is inevitable and it is difficult to rule out the possibility of a negative growth rate “compared to the previous quarter “.
Previously, an official from the Ministry of Strategy and Finance also said: “We do not predict with certainty that there will be negative growth in the second quarter,” but added: “Of course, adjustments will be made.”
Above all, it is not certain that the recovery in consumption and investment in construction which led to economic growth in the first quarter will continue.
The export market continues a clear recovery trend, in line with the global semiconductor economy, but it is too early to judge whether the domestic sector will recover based on first quarter indicators alone.
The problem is that even if growth rate forecasts, a macroeconomic indicator, increase, macroeconomic and financial instability is likely to increase due to the spread of the military conflict in the Middle East and the rise in the exchange rate won-dollar. Some say: “The government seems excited because the growth rate is higher than expected, but now is the time to increase its vigilance because external instability is likely to increase significantly.” »
Journalist Jo Hae-dong
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