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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