South Korea should retain its expansionary monetary policy stance as the economy is estimated to grow at a slower pace, the state run think tank Korea Development Institute said in a report on Thursday.
It forecast gross domestic product to expand 2.6 percent this year, down from the prior estimate of 3 percent. However, growth is forecast to pick up to 3.6 percent in 2014.
The government projects only 2.3 percent expansion for this year. The economic growth has plunged to a three-year low in 2012 with GDP growing by just 2 percent.
The central bank in May assessed that downside risks to growth remain considerable. After holding rates for six months, the bank decided to cut its rate by a quarter point to 2.50 percent.
The institute said it expects inflation to ease to 1.8 percent in 2013 from 2.2 percent in 2012.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.