World Bank: Korea’s GDP Will Rise 5.1%

The World Bank estimated Korea’s gross domestic product (GDP) rose by 3.9 percent in 2005, and predicted the figure would go up to 5.1 percent next year.

In a report titled “Prospects for the Global Economy” released on December 15, it predicted that the global economy would grow 3.2 percent this year despite oil price hikes and hurricane damage in the U.S., and that the global economy would post stable growth next year.

Although oil prices have been on the rise for two consecutive years, the report put forward a positive forecast, noting that inflation and interest rates in oil importing countries are remaining low.

However, the report also stated that the sense of uncertainty lingering in the international oil market and the possibility of an interest rate hike as uncertainties that could affect next year’s global economic outlook.

The World Bank predicts that Asian and North American countries will again drive world economic growth next year. It also says that the economies of developing countries, which grew 5.9 percent this year, would grow 5.7 percent next year.

In its individual country forecasts, it predicts that Korea’s GDP will rise 5.1 percent next year, 1.2 percentage points higher than this year’s growth rate, on the back of increased consumer spending and strong exports.

The World Bank predicts that China’s growth rate will be nine percent thanks to steady increases in exports and domestic consumption, despite shrinking foreign investment and rising concerns over overproduction in the automobile and steel sectors. The report analyzed, however, that China is under pressure to pursue “sustainable growth” over “rapid growth” because of continuing industrial disasters.

The report also predicted that the U.S. economy would demonstrate a stable growth next year.

The World Bank’s outlook for Japan is that it seems to be coming out of its prolonged recession, thanks to increasing exports and domestic consumption.

Joong-Hyun Park sanjuck@donga.com