S Korea economy below potential growth level
SEOUL: South Korea’s finance minister nominee said the country’s months-long property boom is cooling down and economy is below its full potential, signalling to markets that monetary tightening is not urgent for now.
“(The economy) is below full its potential growth rate but it’s premature to say it’s in crisis or recession,” Hong Nam-ki said in remarks to reporters on Friday that were embargoed until Sunday.
Hong, who was appointed by the presidential office earlier on Friday, should get approval of the parliament before taking office though the approval is not mandatory.
Hong’s remarks contrast slightly with the Bank of Korea’s view, which holds that the economy is “roughly around” the its full potential growth level, and has left the door open for a policy rate hike at its November 30 monetary meeting.
The economy expanded an annual 2.0 per cent in July-september, far slower than the second quarter’s 2.8 per cent and missing the poll estimate of 2.2 per cent mainly due to the above-trend expansion seen in the comparable period last year.
Hong noted that overheated housing prices, a long-standing headache for the administration, had “stabilised somewhat”.
The central bank BOK said in a report submitted to the parliament on Thursday that it saw a case for monetary policy tightening to curb rapid growth in consumer and corporate borrowing.