South Korea's central bank on Friday lowered the growth outlook for the economy for the second time this year, a day after it slashed the interest rate in an attempt to shield the economy from the global slowdown.
The Bank of Korea said the gross domestic product may rise 3 percent in 2012, slower than April's forecast of 3.5 percent. In 2013, growth is seen at 3.8 percent compared to 4.2 percent projected earlier.
The growth outlook for both private consumption and exports have been scaled back as weak global economic prospects, mainly due to developments in Europe, dampened demand both domestically and globally.
Private consumption is now forecast to rise 2.2 percent in 2012 and 3.5 percent next year. Exports of goods are likely to grow 4.4 percent in 2012 and 9 percent in 2013. Imports are seen growing 3.8 percent and 8.5 percent this year and the next year respectively, slower than previously estimated.
The central bank noted that the contribution of domestic demand to overall growth will outstrip that of exports, with export growth slowing due to the heightened uncertainties in external conditions.
Inflation outlook has also been cut for a second time this year, mainly due to declines in international commodity prices.
Consumer prices are now forecast to rise 2.7 percent in 2012 and 2.9 percent in 2013, running below the midpoint of the inflation target. In April, inflation was projected to rise 3.2 percent in 2012 and 3.1 percent in 2013.
The bank also lowered the projections for underlying inflation. Core inflation, that excludes food and energy, is seen rising 1.9 percent this year and 2.2 percent in 2013.
The Bank of Korea on Thursday cut the key interest rate by 25 basis points to 3.00 percent from 3.25 percent after keeping the rates unchanged in the past 12 meetings.
by RTT Staff Writer
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