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BOK raises Korea's growth forecast again to 3%

Posted October. 20, 2017 07:56,   

Updated October. 20, 2017 08:56


The Bank of Korea has raised the country's economic forecast this year to 3 percent. The upward revision appears to on the basis of confidence that the country's export and domestic demand are improving on the back of a recovering global economy.

"We expect this year's growth domestic product (GDP) forecast to be 3 percent," said Bank of Korea Governor Lee Ju-yeol on Thursday, explaining the result of the plenary session of the central bank’s Monetary Policy Board. This is a 0.2 percentage point increase from its previous forecast of 2.8 percent made in July. The central bank of South Korea has projected 2018 growth forecast to 2.9 percent.

The governor’s Thursday announcement marks the third time this year to raise the nation’s growth forecast. Early this year, the central bank projected this year's growth outlook to 2.5 percent. But it upped the forecast in April by 0.1 percentage point on faster-than-expected economic recovery followed by another raises in July and October. "Exports are buoyed in line with the global recovery, and domestic consumption also shows a moderate trend of recovery thanks to increased fiscal spending," Lee added.

Meanwhile, the Monetary Policy Board of the Bank of Korea has decided to keep its key interest rate unchanged at 1.25 percent for the 16th consecutive month after lowering it to the current rate in June last year. This is the second longest period of interest rate stability following the 17 months record from February 2009 to July 2010. But there was minority opinion at the board to increase the interest rate, which hints at possible interest rate hike in the near future.

Gun-Huk Lee gun@donga.com