South Korea expects economic growth to slow in 2005

South Korea's economic growth is expected to slow to around five percent in 2005, as a recovery in domestic consumption and investment only partly make up for a slowdown in exports, the finance minister said on Friday.
Finance Minister Lee Hun-jai said the pace of export growth, currently the main driver of growth in Asia's fourth-largest economy, was likely to lost steam in 2005, after recording a blistering pace this year helped by strong demand from China.
"We expect the economy to grow around five percent next year", Lee said In a weekly briefing to reporters. "Domestic consumption is likely to be on a recovery path starting from 2005 given prospects of more hirings and higher individual income in the second half", he added.
Lee also said the central bank's unofficial estimate for growth this year of 5.4 percent was achievable. The finance ministry has set a growth target of more than 5.5 percent this year. The five percent estimate for growth next year is below a six percent growth forecast given by President Roh Moo-hyun early this month.
Record exports of cars, mobile phone and semiconductor chips helped South Korea escape from a brief recession last year, but depressed domestic consumption has been holding back a broader economic recovery.
Lee also said the government would cut mobile phone charges in the second half of the year to help ease potential inflationary pressure.
The economy has also faced price concerns stemming partly from soaring global raw material and oil prices.
The decision to cut phone charges came hours after Lee told a meeting of economic ministers that a series of planned increases in public utility charges in the second half of the year could spread inflation concerns.
He forecast headline inflation would reach 3.4 to 3.5 percent in 2004, with the consumer price index seen hitting 3.7 to 3.8 percent in June and July's figure topping four percent.
The Bank of Korea has officially estimated headline inflation would reach 3.2 percent this year, but it said in May that the bank would raise its 2004 forecast in July due to strong oil prices.