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BOK slashes growth outlook to 2.7 pct

2016/07/14 11:47

SEOUL, July 14 (Yonhap) -- South Korea's central bank on Thursday revised down its growth outlook for Asia's fourth-largest economy to 2.7 percent from 2.8 percent three months earlier, citing sluggish consumption at home and abroad.

The quarterly revision by the Bank of Korea (BOK) came shortly after the government slashed its outlook for 2016 to 2.8 percent from 3.1 percent.

"The local economy will maintain its modest growth trend on expansionary economic policies, but the bank believes local and external uncertainties surrounding the path to growth will remain high," BOK Gov. Lee Ju-yeol told a press briefing.

South Korea's exports have fallen every single month since the start of 2015, apparently forcing the central bank to twice slash its growth outlook to 2.8 percent in April and again to 2.7 percent this week from the initial 3 percent expansion offered at the start of the year.

Local spending, also a major growth engine here, gained only 0.9 percent on-year in the first six months of the year, falling fart short of the bank's 2 percent target for the 2016-2018 period.

The bank has also revised down its outlook for consumer price inflation to 1.1 percent from 1.2 percent forecast three months earlier and 1.4 percent at the start of the year, Lee said.

The top central banker was scheduled to hold a special press conference later in the day to explain the bank's failure to meet its price inflation target.

The scheduled press conference comes under a self-imposed rule, under which the BOK governor is required to offer explanations for a deviation of price inflation from the target when the actual inflation strays from the target by more than 0.5 percentage point for more than six months.