Korean economy-global double-dip Global double-dip to hurt Korean economic growth

SEOUL, Aug. 23 (Yonhap) -- The annual growth of South Korea's economy could fall to the upper range of 3 percent on slumping exports if the global economy slips into a double-dip recession, a think tank said Tuesday. The Korea Institute of Finance (KIF) said in a report that if the global economy falls into a double-dip recession, the U.S. economy is likely to suffer negative growth and the eurozone debt crisis would spread. The think tank said although there is a greater chance of a global slowdown than a recession, a potential global double-dip is likely to bring the growth rate of the Korean economy to the upper range of 3 percent. The KIF's 2011 projection for the local economy stood at 4.4 percent. The estimate is compared to a 4.3 percent growth projection by South Korea's central bank and a 4.5 percent expansion forecast by the Korean government. The report came as the global financial markets have been hit by the first-ever U.S. credit rating downgrade and the eurozone debt crisis, raising concerns about the slowdown in the U.S. economy. The U.S. economy is showing signs of sputtering with its unemployment rate still high. The Federal Reserve pledged to keep its federal funds rate near zero at least through mid-2013 and said it is ready to take actions to support the weak economy. South Korea's export-dependent economy cannot be insulated from the global economic slowdown as the economic downturn in major advanced economies would sap demand for Korean products. Exports account for about 50 percent of Korea's economic output. The KIF said a global double-dip recession would spur demand for safe assets, bring about capital outflows from emerging countries and give strength to the U.S. dollar. sooyeon@yna.co.kr