South Korea’s central bank on Friday cut its growth forecast for this year to two percent, which would be the weakest rate in a decade as the economy is battered by trade disputes.
The world’s 11th-largest economy is highly dependent on international commerce but is grappling with the fallout of a prolonged China-US trade dispute and embroiled in a spat of its own with neighboring Japan.
The Bank of Korea cut its 2019 growth forecast from 2.2 percent to two percent, Governor Lee Ju-yeol told reporters, also trimming its prediction for next year to 2.3 percent from 2.5 percent.
The two percent figure would be the slowest expansion since 2009, when the country posted 0.8 percent growth in the wake of the global economic crisis.
In a statement the BOK said exports were facing continuing “sluggishness,” while domestic consumption growth had also weakened.
The numbers bring the BOK’s forecasts into line with the International Monetary Fund.
The US-China trade war has heightened global economic uncertainty while South Korea and Japan have been at loggerheads over wartime history, with Tokyo in July tightening export controls on three chemicals essential to South Korean tech companies such as Samsung.
An easing of the dispute between Beijing and Washington would see global investment rise and “contribute to an increase in our exports,” governor Lee said, but added that would not be enough on its own to ensure strong economic momentum.
The central bank kept its key interest rate at a record low 1.25 percent in an effort to prop up growth, having announced two cuts already this year.
South Korean President Moon Jae-in came to office in May 2017 with an economically unorthodox policy of “income-led growth,” promising to jump-start expansion through a series of labor-friendly policies such as wage increases.
But expansion has since been slipping.
Seoul says North Korea has fired an unidentified projectileSouth Korea said on Thursday that North Korea has fired an unidentified projectile.A brief statement Thursday from Seoul’s Joint Chiefs of Staff ... World News
Japan’s move to lower South Korea trade status takes effectJapan’s downgrading of South Korea’s trade status took effect Wednesday, a decision that has already set off a series of reactions hurting ... Economy
Japan's Nissan mulls pulling out of South Korea as trade tensions rise: ReportNissan Motor Co is considering pulling out of South Korea, the Financial Times reported on Friday, as political and trade tensions between Japan and ... Economy