South Korean central bank revises up 2021 growth forecast to 4 pct

Seoul, May 27 (EFE).- South Korea’s central bank on Thursday raised its economic growth forecast for 2021 by one percentage point to 4 percent due to the progressive recovery of the economy while keeping interest rates unchanged at a record low of 0.5 percent.

The Bank of Korea (BoK) also forecast that Asia’s fourth largest economy will grow 3 percent in 2022.

In the face of strong signs of recovery, the bank expects inflation this year to be 1.8 percent, half a percentage point above the previous forecast.

“The recovery of the Korean economy has strengthened. Exports have sustained their buoyancy and facilities investment has continued to recover robustly, while private consumption has gradually emerged from its slump,” the BoK said in a statement.

“Labor market conditions have continued to improve,” the bank added. “Going forward, the recovery of the Korean economy is likely to strengthen thanks to the buoyancy of exports and investment as well as the improvement in private consumption.”

Exports, which account for almost half of South Korea’s gross domestic product (GDP), expanded in April for the sixth consecutive month.

They rose 41.1 percent year-on-year owing to an increase in global demand for semiconductors and automobiles.

As expected, the central bank left the base rate unchanged after changing it to a record low of 0.5 percent in May last year to help the economy deal with the impact of the coronavirus pandemic.

Many analysts predict that the BoK will not increase rates during 2021 since around 500-600 daily Covid-19 infections have been recorded in the country for months with no signs of abating amid a slow vaccination rollout.

Only 7.8 percent of the country’s target population has received at least one dose. EFE

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