South Korean govt expects economic recovery to continue

South Korea’s government said on Wednesday it expects the economic recovery to continue in 2018 amid the slower economic growth.

The government projected economic growth of about 3.0 per cent in 2018, slightly below its 3.2 per cent estimate for this year, the fastest since the 3.3 per cent expansion seen in 2014, reports Reuters.

The finance ministry’s latest outlook for next year, published on Wednesday, is unchanged from its earlier projections made in July, and sits slightly above the Bank of Korea’s 2.9 per cent.

Asia’s fourth largest economy is wrapping up this year on a firm note, as exports are expected to rise for a 14th straight month in December on strong global demand of their memory chips.

However, South Koreans hold record debt while the nation’s workforce is shrinking, which could hurt spending in 2018 as interest rates rise.

The ministry expects exports growth to moderate to 4.0 per cent in 2018 from an estimated 15.8 per cent expansion this year, while facility investment will grow at a slower 3.3 per cent after soaring 14.1 per cent this year.

The government also sees shrinking of the working age population, which accounted for 72.9 per cent of the total population in 2016, to accelerate in 2018 at a much faster rate than those of Japan and the United States.

South Korea is raising its minimum wage by 16 per cent to 7,530 won ($7.01) per hour in 2018, the biggest jump in nearly two decade, affecting nearly one in four South Korean workers.