South Korea’s central bank raised its economic growth forecast for this year from 4.6 percent to 5.2 percent given stronger exports and rising domestic demand.
The increase from December’s outlook is justified “with exports rising and domestic demand, including consumption and facilities investment, recovering,” the Bank of Korea (BOK) said.
It forecast 4.8 percent growth for next year.
PHOTO: BLOOMBERG
Asia’s fourth-largest economy had four straight quarters of growth last year after contracting in late 2008 amid the global downturn. Demand for exports of autos, flat screen TVs and mobile phones wilted.
South Korea managed annual growth last year of just 0.2 percent, the worst performance since a contraction of 5.7 percent in 1998 during the Asian economic crisis.
The revised forecast, if achieved, would be the best since a similar 5.2 percent expansion in 2006.
The BOK said it expected trade to grow 5.3 percent this year after last year’s contraction of 12.3 percent.
Still, the bank expressed concern about a “considerable degree of uncertainty.”
“The fiscal problems of euro zone countries and the enhanced liquidity control in China exist as disturbance factors in the global financial markets,” the bank’s statement said.
China, South Korea’s biggest trading partner, has been curbing bank lending to prevent economic overheating and asset price bubbles.
On Friday, the BOK left its key interest rate at a record low 2 percent at the first monetary policy committee meeting chaired by its new governor, Kim Choong-soo, whose four-year term began on April 1.
The bank slashed the rate six times from October 2008.
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