Fri, Apr 14, 2017 - Page 10 News List

S Korea raises its growth outlook, but warns of risks

AFP, SEOUL

Bank of Korea Governor Lee Ju-yeol speaks at a news conference following a monetary policy meeting at the central bank’s headquarters in Seoul yesterday.

Photo: Bloomberg

The Bank of Korea yesterday raised its growth forecast for this year, but warned that the pace of recovery could be affected by rising protectionism.

The South Korean central bank said it expected expansion of 2.6 percent this year, up from its projection of 2.5 percent in January, marking the first upward revision in three years.

The bank left its key interest unchanged at a record-low 1.25 percent for the 10th consecutive month, in a move aimed at maintaining financial stability with uncertainty both at home and abroad.

“The Board sees the global economic recovery as likely to be affected by factors such as the directions of the new US government’s economic policies,” the Bank of Korea said in a statement following a monthly board meeting.

The bank said the pace of monetary policy normalization by the US Federal Reserve and “movements toward spreading trade protectionism” were other factors that could hamper the global economy.

‘AMERICA FIRST’

US President Donald Trump administration’s “America first” focus has raised the specter of protectionism to reduce the large US trade deficit, which could see higher tariffs on imports.

While the South Korean economy has shown moderate growth, the central bank said growth in exports and domestic demand is “expected to be limited, owing to changes in conditions related to trade with major countries.”

Exports rose for the fifth consecutive month last month, while retail sales expanded 3.2 percent in February from a month earlier, signalling a pick up in consumer sentiment.

Strained economic ties with China following Seoul’s decision to deploy a US missile defense system remains a key factor that could put a damper on South Korea’s economic recovery.

Beijing launched a series of measures against South Korea seen as economic retaliation, forcing dozens of South Korean retail stores in China to shut their doors and banning Chinese tour groups from visiting.

COUNTERMEASURES

“We will use all possible measures to counter [Beijing’s retaliatory measures], but we will not let go of our economic cooperation with China,” South Korean Minister of Finance Yoo Il-ho told a government meeting.

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