BCN-09 South Korea cuts 2019 growth outlook

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ZCZC

BCN-09

SKOREA-ECONOMY-GROWTH

South Korea cuts 2019 growth outlook

SEOUL, Jan 24, 2019 (BSS/AFP) – South Korea’s central bank cut its 2019
growth forecast Thursday, adding to concerns over the sluggish economy and
persistent youth unemployment.

The Bank of Korea (BOK) said it expects the world’s 11th-largest economy to
expand 2.6 percent in 2019, down 0.1 percentage points from its earlier
prediction.

The figure is also down from the actual expansion of 2.7 percent seen in
2018, which was its weakest pace in six years.

“As there are signs of weakening global growth, it is true that there are
concerns expansion in the domestic economy is slowing,” Bank of Korea
governor Lee Ju-yeol told reporters.

The forecast is in line with the International Monetary Fund’s prediction
and higher than the 2.5 percent outlook by Fitch Ratings.

South Korea’s growth will decelerate until next year “due to weak private
investment and export growth” Fitch said Thursday, adding that the country
remains exposed to geopolitical risks despite the rapid warming of ties with
the nuclear-armed North.

“A renewed flare-up of tensions could weigh on both business and consumer
sentiment in Korea,” it said in a statement.

Unemployment rose to 3.4 percent in December up 0.2 percentage points from
a month earlier, with youth joblessness hovering at nearly nine percent, and
the weak economy has been a key factor driving down President Moon Jae-in’s
poll ratings.

The Bank of Korea left its key interest rate unchanged at 1.75 percent.

South Korea’s export-driven economy has been pressured by slowing growth in
China, its biggest trading partner, where expansion slipped to a 28-year low
last year.

The South has also been squeezed by trade tensions between the US and
China, the world’s top two economies and key drivers of global growth.

Moon sacked his top two economic officials in November, the finance
minister and his own policy chief, while his chief of staff left earlier this
month.

BSS/AFP/HR/0955