Bank of Korea holds rates at record low, cuts growth forecasts
Meanwhile, the central bank cut its forecasts for inflation and economic growth due to ongoing weakness in demand from China, which is South Korea’s main export destination, despite some improvement in domestic consumption and confidence. South Korea’s exports posted consecutive declines since the beginning of this year and according to the Trade Ministry, shipments will continue to decline in October, as well.
According to the BOK, South Korea’s economy will grow by 2.7% this year and 3.2% in 2016, down from its previous estimates of 2.8% and 3.3%, respectively. The BOK also slashed its inflation estimates to 0.7% from 0.9% for 2015 and to 1.7% for 2016.
In the second quarter, growth in South Korea’s economy slowed to 0.3% on a quarterly basis following a growth rate of 0.8% in the first quarter due to an increased number of MERS cases which weakened the consumer spending as well as weak exports.
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