South Korea has revised its growth forecast for 2014 and 2015 down due to weakening domestic consumption.
The Ministry of Strategy and Finance said today (December 22nd) the economy would grow by 3.4 per cent this year instead of the 3.7 per cent previously forecast, and by 3.8 per cent in 2015 instead of the predicted four per cent.
The Ministry’s director-general Lee Chan-woo said consumer and business spending had been weaker than expected because of ongoing economic uncertainty.
"Our policies have remained expansionary but consumer and investment sentiment in the private sector did not improve as much as they should have," he said.
South Korea's economy is still facing challenges, with exports falling amid cooling demand from China.
This is despite the government setting up measures to boost growth such as the central bank cutting interest rates twice this year to boost growth.
Finance minister Choi Kyung-hwan has also launched a $40 billion (£25.6 billion) stimulus package and announced a record budget plan for next year.
According to the Financial Times, the government is planning to introduce extra measures to boost wages and encourage businesses to create jobs and increase investment such as increasing the minimum wage and spending almost 60 per cent of its annual budget in the first half of 2015.
The ministry said he expects these measures, along with falling oil prices and a global economic recovery, will contribute to improve economic conditions next year.
"We must maintain our expansionary macroeconomic and fiscal policies so that people can feel the effect of economic recovery," President Park Geun-Hye said at a meeting of economic ministers today, quoted by AFP.
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