BOK's Rhee expects softer economic growth closer to 2.2% this year - BNN Bloomberg

(Bloomberg) — Bank of Korea Governor Rhee Chang-yong said economic growth this year could be closer to 2.2%, a downgrade from an earlier projection, as policymakers assess the current health of the economy. keep a close eye on the economy.

South Korea’s economic growth outlook turned less optimistic last week after the central bank reported that gross domestic product grew just 0.1% in the third quarter from the previous three-month period, while exports weakened.

The result was well below the expected 0.4% growth in a Bloomberg survey and prompted BOK officials to point out the possibility of lowering their annual growth projection of 2.4%. The central bank cut interest rates earlier this month as its concerns shifted to economic growth, while inflation and household debt growth slowed.

In comments that provide the most specific hint of what the new forecast could be when the BOK holds a policy meeting next month, Rhee told lawmakers on Tuesday that the economy could grow 2.2% or 2.3% in 2024. That would still be above growth potential. , he added.

Forecasting growth for 2025 has become more complicated as exports fell in real terms last quarter, Rhee said. The outcome of the US presidential race, which has implications for trade, and whether China succeeds in boosting its economy are among the risks to South Korean exports and growth, he said.

Speculation that Republican candidate Donald Trump could win the US election has fueled the dollar while weakening the South Korean currency. Rhee said policymakers are wary of currency fluctuations, and indicated that authorities can intervene in currency markets if necessary, saying they have enough “ammunition.”

President Yoon Suk Yeol also spoke about the won during a cabinet meeting on Tuesday. Yoon said it is important to respond quickly to prevent changes in exchange rates, supply chains or oil prices from having a negative impact on the economy.

The BOK began its policy turnaround by cutting the benchmark interest rate to 3.25% on October 11, joining global peers in shifting their focus to safeguarding economic momentum. While most economists expect a pause when the board meets in November for a new decision, speculation has increased over a faster pace of easing since data showed economic growth is slowing.