Roundup: S. Korea unveils growth strategy after cutting 2016 growth outlook

South Korea on Wednesday unveiled a strategy to reinvigorate its lackluster economy as the country showed a gloomier assessment by cutting its growth forecast for next year.

President Park Geun-hye chaired a meeting with economy-related ministers, where the country's economic policy direction for 2016 was finalized, according to the Ministry of Strategy and Finance.

Outlook for the 2016 real GDP growth was revised down by 0.2 percentage point to 3.1 percent. Forecast for this year's economic expansion was also lowered from 3.1 percent to 2.7 percent.

The downward revision reflected concerns about the so-called "consumption cliff," which means an abrupt decline in private consumption in the first quarter of 2016 after stimulus measures like a consumption tax cut disappear.

The government plans to frontload about 40 percent of its 2016 annual budget in the first quarter to prevent the possible consumption cliff. To boost consumption, it will also regularize the South Korean version of "Black Friday" in November, which was held for the first time this year to attract consumers with massive discount sale events.

Private consumption is forecast to grow 2.4 percent in 2016 thanks to low interest rates and cheaper oil, while the outlook for facility investment is set at 4.4 percent for next year.

Exports, which account for about half of the economy, are predicted to rise 2.1 percent next year amid slowdown in China, South Korea's largest trading partner, and uncertainties caused by interest rate hike in the United States.

During the January-November period, South Korea's exports declined 7.6 percent from the same period of 2014.

The South Korean government worried more about China's economic slump than the U.S. rate hike because about a quarter of Seoul's exports depends on China. The state-run Korea Development Institute (KDI) estimated a fall of 0.21 percentage points in South Korea's economic growth when China's growth falls by 1 percentage point.

To bolster up exports, South Korea plans to foster five promising export items, including cosmetics, clothing, food & beverage, household items and baby products, all of which are consumer goods.

It means the country's transformation to consumer goods-focused exports from concentration on heavy industries such as automobiles, electronics, steel-making and shipbuilding sectors.

Meanwhile, the ministry unveiled its 2016 outlook for the current economic growth rate at 4.5 percent, lower than this year's forecast of 5.0 percent. The current growth rate means a real GDP growth rate plus headline inflation.

The revelation of the current growth rate indicates that the ministry will make efforts to boost the low consumer price inflation. The country's consumer prices added 1 percent in November from a year earlier, escaping from the zero headline inflation for the first time in a year.

Outlook for 2016 headline inflation was revised up to 1.5 percent from earlier estimate of 1.2 percent.

Bank of Korea (BOK) cut its inflation target to 2 percent for the 2016-2018 periods from the previous three-year period's target band of 2.5-3.5 percent.

The BOK also estimated the economy's potential growth rate at 3.0-3.2 percent, lower than 3.8 percent estimated three years ago. The growth potential means the highest possible growth rate by using every possible production factors like capital and labor while suppressing inflation.

The bank downgraded its 2016 growth forecast by 0.1 percentage point to 3.2 percent in October, slightly higher than the ministry's outlook of 3.1 percent. Enditem