South Korea cuts growth target as global demand gets hit from US-China trade war

South Korea on Wednesday cut this year’s economic growth target to what would be a 7-year low as the prolonged U.S.-China tariff war hit global demand, although the revised projections were above the market’s estimates.

The worsening global outlook also prompted the government to slash its projections for exports for Asia’s fourth largest economy in a sign policymakers will likely need to do more to prop up slumping demand.

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The government now aims to achieve growth of between 2.4% and 2.5% this year, slower than 2.6 to 2.7% range projected in its previous forecast in December last year, the finance ministry said in a scheduled mid-year update of its economic forecasts.

In a dramatic change of its views, the government now expects exports to shrink by 5% for the whole of this year, giving up an earlier projection for 3.1% growth.

Along with the downgrade of its views on the gross domestic product growth, the ministry also lowered forecasts on most other major indicators including private consumption, capital investment and construction spending.

We’ve lowered the forecast as uncertainties over the trade war remain high amid the slowing global economy, while a recovery in the semiconductor sector that accounts for 20% of total exports is being delayed,

Lee Eog-won, director-general of the ministry’s economic policy bureau, told a briefing.

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