BOK Slashes Growth Projection to 6-Year Low
21 October, 2018
The Bank of Korea on Thursday slashed its growth outlook for the economy this year from 2.9 to 2.7 percent. In a slap in the face for the government, it also lowered its employment growth projection from 180,000 to 90,000.
That marks the lowest GDP growth outlook in six years and the smallest job growth in eight.
Amid the slowing economy, the BOK froze the base interest rate at 1.5 percent for an 11th month despite a hike in U.S. interest rates. That leaves Korea trailing America by a dangerously wide margin of 0.75 percentage points.
The central bank cited businesses' weak second-quarter earnings and shrinking facilities and construction investment as the main reasons. It also slashed its outlook for next year from 2.8 to 2.7 percent.
Bank of Korea officials hold a press conference in Seoul on Thursday. /Newsis
BOK Governor Lee Ju-yeol said, "Reflecting second-quarter figures led to a slightly lowered projection," but added the outlook "does not veer widely" from the potential growth rate.
But the job situation is getting worse. The BOK originally forecast jobs to grow by 300,000 this year, but reduced the outlook to 260,000 in April and 180,000 in July, before halving it again on Thursday.
It also cut its job growth outlook for next year from 240,000 to 160,000.
Lee hinted strongly at an interest rate hike in November. "We will take into future monetary policy decisions reducing excessive household debts and securing room for rate decreases aimed at stimulating the economy," he said.