Korea expects 3% growth... Bank of Korea forecasts UK growth around 5% next year

Bank of Korea Releases 'Overseas Economic Focus'
Employment Market Improvement Expected... Labor Shortage and Wage Growth Continue

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Amid forecasts that South Korea's growth rate will record in the 3% range next year, an analysis suggests that the UK will continue a favorable recovery trend around 5%. However, factors such as economic activity contraction due to the spread of variant viruses and global supply disruptions remain variables for the growth trajectory.

On the 26th, the Bank of Korea stated in its 'Overseas Economic Focus' report, "The UK economy in 2022 is expected to continue a favorable recovery trend around the 5% range," adding, "Private consumption will lead growth, and investment is also expected to continue increasing, supported by the government's large-scale investment tax credit measures."

The report noted, "It is expected to take considerable time due to the continuation of global supply bottlenecks and virus resurgence."

The Bank of Korea also anticipated that the labor market would continue its improving trend. Although uncertainty in the labor market is expected to somewhat increase due to the end of the government's job retention measures, the possibility of large-scale layoffs is considered limited.

However, it emphasized that labor shortages and wage increases may continue for some time in certain industries. The report stated, "Due to the expansion of public sector employment to respond to the spread of infectious diseases, the available workforce in the private sector has decreased, causing ongoing recruitment difficulties in some industries." In fact, the average weekly wage growth rate in October was 4.7%, higher than the pre-COVID-19 crisis level of 3%.

Inflation is expected to remain at a high level exceeding the Bank of England's inflation target. The Bank of England has forecasted that the consumer price inflation rate will rise by about 6.0% in April next year and remain at a high level for a considerable period before returning within the inflation target level (2%) in the second half of 2024.

The report added, "Due to Brexit and the continuation of supply bottlenecks caused by the spread of infectious diseases, as well as increased input costs, commodity prices are expected to continue rising," and "Increases in electricity and gas charges are also expected to contribute to higher inflation rates."

Meanwhile, the Bank of Korea and the Ministry of Economy and Finance have projected South Korea's economic growth rate next year at 3.0% and 3.1%, respectively. However, they acknowledge that the resurgence of COVID-19 and global supply chains could affect future growth paths. Additionally, accelerated shifts in monetary policies of major countries such as the United States are expected to act as variables.

This content was produced with the assistance of AI translation services.