South Korean central bank revises 2019 growth forecast down slightly

19, Apr. 2019

SEOUL, NNA – South Korea’s central bank revised down its growth forecast for this year to 2.5 percent from the 2.6 percent projected three months ago on moderating consumption and slower exports, but its forecast for 2020 was unchanged at 2.6 percent.

The Bank of Korea released its quarterly economic outlook on Thursday.

Key points:

―― The forecast 2.5 percent GDP growth would be the lowest in seven years. It was the fourth consecutive quarter of downward revisions for 2019.

―― South Korean exports fell 8.5 percent on year in the January-March quarter, led by a 17.3 percent drop in shipments to China, which account for one-quarter of all exports.

―― It is uncertain whether the global semiconductor market will pick up later this year in view of the U.S.-China trade dispute.

―― The Bank of Korea also revised down its inflation forecast to 1.1 percent for 2019 from 1.4 percent projected in January, citing downward pressure from energy and commodities prices. The bank maintained its 2020 forecast for inflation at 1.6 percent, but that is still below its medium-term target of 2 percent.

Takeaway:

―― Central bank policymakers expect a slight pickup in GDP growth next year, counting on a smaller drop in construction and recovery in business investment in general and global demand for semiconductors in the second half of this year.