Bank of Korea expects economy to grow 2.6% this year

Bank of Korea expects economy to grow 2.6% this year


The Bank of Korea has hiked its economic growth
outlook for 2017. The central bank also froze its benchmark
interest rate on Thursday… and is set to keep its accomodative policy for the time
being. Kim Min-ji has more. The Bank of Korea on Thursday said it expects
the local economy to expand 2-point-6 percent this year. That’s up zero-point-one percentage point
from its previous outlook of 2-and-a-half percent in January. It marks the first upward revision in exactly
three years. “The revision reflects a recovery in the global
economy,… and some emerging markets, like Russia and Brazil, have also returned to positive
growth. Thanks to this,… Korea’s exports and investment
have picked up,… and the political uncertainties have eased since the start of the year.” But there are downside variables that could
challenge Korea’s path toward growth. The BOK cited concerns about increased protectionist
sentiment from the U.S. and geopolitical risks stemming from North Korea. It added that China’s apparent economic retaliation
over Seoul’s deployment of a U.S. missile defense system is expected to pull down the
country’s growth rate by 0-point-2 percentage points this year,… and could result in losses
of 25-thousand jobs. As a result, while the central bank noted
that the country is showing signs of modest recovery,… the figure was only revised ever
so slightly. “The upward revision of 0-point-1 percentage
points is not a meaningful change in my view,… however, it shows the Bank of Korea is giving
a more upbeat picture in the first quarter of the year. However, Governor Lee did mention it is a
short term outlook rather than a mid-to-long term.” For the time being, at least, the BOK says
current conditions offer less of a reason to lower the key interest rate. In a widely expected decision,… it kept
the rate steady at a record low of one-point-two-five percent — unchanged since June last year. This comes despite a recent U.S. rate hike
— which the central bank said may be an important factor to consider,… but is not one that
will trigger automatic tightening on its part. “For now,… it says it will maintain its
current policy of monetary easing to support growth,… as the inflationary pressures are
not that pronounced,… and vowed to keep close tabs on the changing external and internal
conditions when determining the direction of future policies. Kim Min-ji, Arirang News.”

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