BOK Governor Hints at Lowering Forecast Growth Rate for 2008

Bank of Korea Governor Lee Seong Tae hinted at the possibility of lowering this year’s economic growth target. The central bank’s Monetary Policy Committee yesterday decided to hold overnight call rate at the current five percent, keeping the target rate unchanged for the sixth straight month.

In a press conference after the committee’s meeting, Governor Lee said, “Possibility is mounting that the economic forecast is likely to decline.” His comment suggests that the BOK might lower its current estimate for GDP growth of 4.7 percent, released last December.

He added, “Decisions by major economies to lower their economic forecasts are highly likely to negatively impact Korean exports, thus hurting both stock prices and consumer confidence. There exists the possibility that the economic growth rate may decline. However, the rate is unlikely to remain at a level low enough to be considered stagflation.”

The BOK governor also noted, “High inflation shouldn’t be allowed to take root in the economy, but it is not desirable for a slowing economy to put a burden on employment and household income. Considering consumer prices grew 3.9 percent in January, the growth rate will likely decrease gradually in the second half of the year.”

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