The Bank of Korea (BOK) on Thursday cut its earlier economic growth forecast of the South Korean economy to 2.6 percent for 2019 amid signs of a global slowdown and heightening economic uncertainties over trade tensions.
The projection is 0.1 percentage point lower than its growth outlook made in October last year.
|Bank of Korea (BOK) Gov. Lee Ju-yeol holds a press briefing after a monetary policy board meeting at the BOK's headquarters in Seoul on Jan. 24, 2019. (Yonhap)|
The downgrade came along with the latest data that the South Korean economy pulled off a six-year low growth of 2.7 percent last year amid weakening corporate investment and exports.
For 2020, the BOK said the economy is expected to expand 2.6 percent.
It said consumer prices are projected to go up 1.4 percent this year, slashing 0.3 percentage point from its earlier forecast, due to a sharp downside trend of crude oil prices and the government-led social welfare support efforts.
The inflation is estimated to stand at around 1.6 percent for next year.
Employment will likely increase by 140,000 in 2019 and 170,000 in 2020, up from 97,000 new jobs last year thanks to the government's job creation policies.
The number of newly created jobs nose-dived from 315,700 in 2017 amid corporate restructuring in labor-intensive sectors, including shipbuilding and carmaking firms.
Goods exports will rise 3.1 percent this year and 3 percent next year, slowing down from a 3.9 percent rise in 2018.
The BOK said exports will be dragged down by sluggish global demand for key items like memory chips, which have largely contributed to the upside mode of South Korean exports.
Deepening trade disputes and a possible slowdown of the Chinese and eurozone economy will increase downside pressure on South Korea's outbound shipments.
But the central bank expects the semiconductor market to make a turnaround in the latter half of this year after the current adjustment of demand.
The country's current account will remain in the black in 2019 and 2020, but the amount will likely be trimmed to US$69 billion and $68 billion, respectively, from last year's $75 billion.
"We will face stronger downside pressure at home and abroad this year and next year," Lee Hwan-seok, director general of the research department of the BOK, said in a briefing. "But expansionary fiscal spending and investment will relieve some of the pressure and help the economy meet the 2.6 percent annual growth target."
The South Korean government has mapped out 470 trillion won (US$416 billion) for the 2019 budget, up 9 percent from a year earlier, as part of its efforts to strengthen its economy-boosting role. (Yonhap)
Kim Jing-mi firstname.lastname@example.org
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