Foreign investment banks cut growth forecast of S. Korean economy

SEOUL, Sept. 4 (Yonhap) -- Global investment banks revised down the 2011 growth projection for the South Korean economy to 4 percent, citing rising consumer prices and the global economic slowdown, according to industry sources Sunday.
The local economy is expected to expand 4 percent this year, according to the average projection made by nine foreign investment banks as of the end of August. Data was compiled by foreign investment banks, local brokerages and the Korea Center for International Finance.
The figure compares with a 4.2 percent expansion projected one month ago by the nine financial firms, including UBS AG, Citigroup Inc. and Goldman Sachs Group Inc.
South Korea's growth forecast for this year ranked ninth-lowest out of 10 Asian countries. China was forecast to make the largest economic expansion this year of 9.1 percent, followed by Indonesia's 6.4 percent and Hong Kong's 5.9 percent growth. Thailand was expected to grow at the slowest pace this year with 3.9 percent growth outlook.
The investment banks' projection came in lower than the government forecast of 4.5 percent growth.
UBS cut South Korea's economic growth outlook by 0.5 percentage point to 3.3 percent, as South Korea is one of the two most vulnerable countries to global economic conditions. Along with Taiwan, South Korea relies heavily on exports.
Citi projected the local economy to expand 3.7 percent this year, compared with its previous projection of 4.3 percent. Goldman estimated South Korea's economic growth at 4.2 percent, down 0.1 percentage point from its previous forecast.
Foreign investment banks, meanwhile, revised up their outlook for South Korea's consumer prices. They expected the country's consumer prices to grow 4.2 percent this year, compared with their previous estimate of 4 percent.
ylee@yna.co.kr