South Korea brings down 2016 growth forecast to 2.8%

South Korea's Finance Ministry on Tuesday revised its GDP growth forecast for 2016 downward by three-tenths, to 2.8%, in line with most other predictions, and announced an imminent fiscal stimulus package to revitalise the economy.

In the report, the ministry which had upheld the estimate at 3.1% so far, said the country is facing a decline in national production as well as foreign demand, besides confronting uncertainties over Britain's decision to leave the European Union (EU), EFE news reported.

The 2.8% growth forecast for the current year is in keeping with the figures published by the Bank of Korea in April, and is one tenth higher than the 2.7% projected by the International Monetary Fund.

In a statement, the Seoul ministry said the economy may lose steam in the second half of the year owing to export slowdowns and the end of tax reduction programmes.

In a bid to tackle the slowdown, the ministry also announced it is preparing a fresh stimulus injection of $17 billion, using tax revenue surplus and state funds.

Although its exact volume will be determined only after further consultations with Parliament, the government said approximately half the amount – $8.5 billion – will be allocated as additional budget spending through state corporations.

The South Korean economy, which has a high degree of export-dependence, has seen growth slowing in recent months as overseas trade declined due to falling internal and external demand.

Last year, South Korean GDP grew 2.6%, its lowest since 2012.