[UPDATES] South Korea's economic growth outlook slashed to 2.8 %

By Park Sae-jin Posted : April 19, 2016, 14:30 Updated : April 19, 2016, 18:04

[Yonhap Photo]

South Korea's central bank slashed its outlook for this year's economic growth to 2.8 percent Tuesday and kept interest rates unchanged for a tenth consecutive month, citing uncertain factors such as low oil prices and global market volatility.

The Bank of Korea's (BOK) said it slashed its growth outlook to 2.8 percent from an earlier projection of three percent. The cut came after the International Monetary Fund lowered its outlook for South Korea's economy to 2.7 percent from 3.2 percent.

The inflation forecast for 2016 was also lowered from 1.4 percent to 1.2 percent, but the central bank held its base rate steady at 1.5 percent set in June 2015.

The central bank said South Korea would see a moderate expansion of economic growth and consumption down the road despite sluggish exports which fell 3.1 percent on-year in the first quarter of this year. Growth, however, can be affected by external factors, it said

BOK Governor repeated his earlier assertion that the central bank's current monetary policy was already sufficiently supportive of the economy, ruling out more aggressive monetary easing.

The bank's lowered growth forecast fueled expectations of a rate cut in the future, but Lee stressed that there is nothing much to do only with a rate cut at a time of lingering market uncertainties at home and abroad, calling for structure reforms together with fiscal and monetary policies to overcome difficulties.

Lee said South Korea's first-quarter performance was weaker than expected because of low oil prices and a lowered outlook for global growth and trade. "However, I believe the economy will show steady improvement after the second quarter."

Aju News Lim Chang-won = cwlim34@ajunews.com
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