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(%) 2012 2013(f) 2014(f) World economy 3.2 2.9 3.6 advanced 1.5 1.2 2.0 u.s. 2.8 1.6 2.6 eurozone -0.6 -0.4 1.0 Japan 1.9 2.0 1.2 emerging 4.9 4.5 5.1 china 7.8 7.6 7.3 <TabLe 1> growTH raTe foreCasTs for MaJor eConoMies source: imf World economic outlook (Weo) october 2013 A s s e t M A n A G e M e n t consumption presented a bigger growth rate. While Korea has entered a stage of recovery as it sustained 1.1 percent growth for two consecutive quarters, the fourth quarter is expected to grow at a lower rate. Tis fore- cast is based on the expectation that reduced government spending driven by a lack of tax revenues will weaken policy efectiveness and that exports and domestic demand will not be able to quickly improve due to the continued sluggish real estate market, household debt burden, and uncertainty surrounding glob- al and domestic conditions. Te projected growth rate will slightly climb to mid- to up- per 2 percent for this year, from 2.0 percent growth in 2012. With advanced nations leading the world economy toward recovery, Korea is also ex- pected to show growth and greater vitality in 2014. It will recover very slowly and the growth rate is forecast to reach the lower 3 percent range. Due to high value of the won, exports are projected to grow just by a single digit percentage and provide a weaker fuel for growth compared to a few years ago when Lehman Brothers collapsed. With household debt, limited consumption and depressed val- ues of asset and property, domestic demand is unlikely to recover much. Although construc- tion investment saw a solid upward trend this year, growth is expected to slow down as the government plans to limit housing supply and cut the budget for social overhead capital (SOC) business. Slow growth will continue in 2014, with the real growth rate predicted to fall short of the 4.3 percent averaged between 2000 and 2012, with the potential growth pre- dicted at 3.8 percent. Next year, Korea is likely to be sensitive to the volatile conditions of the global economy. With the Federal Reserve tapering quantita- tive easing by mid-2014 and the U.S. interest rate increasing towards the end of the year, interest rates of other nations including Ko- rea will be afected, dampening consumption and investment sentiments. Te second half will be more afected than the frst half. Te Korean economy is predicted to grow in 2014 but a quick recovery to the potential growth level is unlikely. limited to around 1 percent. Although Japan benefted from Abenom- ics, a sales-tax increase next year is expected to slow growth. However, with positive re- sults of Abenomics and the Japanese govern- ment’s various protective measures yet to be implemented, the shock is unlikely to be the same level as following the latest tax raise in 1997. Te Japanese growth rate is forecast to drop from around 2 percent this year to lower 1 percent next year. Although China was held back in the frst half with three risks including shadow bank- ing, local government debt, and real estate bubble, it showed signs of recovery in the sec- ond half as exports and domestic demand in- creased. China’s growth rate rose back to 7.8 percent in the third quarter, from 7.5 percent in the second quarter, 7.7 percent in the frst quarter, and 7.9 percent in the fourth quar- ter last year. Tough the outlook for recov- ery is promising if the rebound momentum is sustained, the government is controlling growth rate to build a solid foundation for the economy. Currently, China’s investment accounts for 40 percent of its total GDP and policymakers are making eforts to achieve stable growth through economic reforms and corporate restructuring. Te growth rate for next year is expected to remain in the low to mid-7 percent range. Korean economy: a forecast of Limited recovery Moving out of a stagnant economy at 0 per- cent that started in the frst quarter of 2011, Korea grew by 1.1 percent in the second and third quarters this year. Exports that grew just 0.6 percent in the frst half demonstrat- ed steady improvement in the second half. In the third quarter, the growth rate for equip- ment investment turned positive and private