S Korea econ­omy faces head­winds: BOK

Viet Nam News - - ASIA BUSINESS -

SEOUL — South Korea’s cen­tral bank chief said yes­ter­day that strong head­winds at home and abroad are putting Asia’s fourth­largest econ­omy in a tough sit­u­a­tion mov­ing for­ward.

“The South Korean econ­omy has been pulling off steady growth since last year, but it has be­come hard to be op­ti­mistic due to neg­a­tive ex­ter­nal and in­ter­nal con­di­tions,” Bank of Korea (BOK) Gov­er­nor Lee Ju-yeol said in an in­au­gu­ra­tion cer­e­mony for new mone­tary pol­icy board mem­ber Lim Ji-won.

Lim, a for­mer se­nior economist at JP Mor­gan, will start her fouryear term yes­ter­day. She is the sec­ond fe­male mem­ber of the BOK board in its his­tory.

“Un­cer­tain­ties are still high as ma­jor economies are go­ing through mone­tary nor­mal­i­sa­tion and (there are) trade ten­sions be­tween the United States and China,” said Lee. “On the do­mes­tic side, em­ploy­ment re­mains slug­gish.”

The South Korean econ­omy ex­panded 1.1 per cent in the first quar­ter, a turn­around from a 0.2 per cent drop in the pre­vi­ous quar­ter. The BOK said the first-quar­ter fig­ure is in line with the BOK’s fore­cast of 3 per cent over­all growth for 2018.

But ex­perts noted that prospects are not very bright in the face of the lat­est neg­a­tive eco­nomic data and rising global down­side risks.

The coun­try’s job cre­ation re­mains weak, the num­ber of new jobs in the back­bone man­u­fac­tur­ing sec­tor de­clined amid re­struc­tur­ing in the labour in­ten­sive ship­ping and au­tomak­ing in­dus­tries. Ear­lier, the cen­tral bank low­ered its es­ti­mate for job cre­ation to 260,000 from an ear­lier pro­jec­tion of 300,000.

At the same time, house­hold debt is on a steady rise and sur­passed 1,450 tril­lion won (US$1.34 tril­lion) last year, with num­bers con­tin­u­ing to rise.

Also, con­sumer price in­fla­tion has been hov­er­ing around 1.5 per cent for months, far lower than the BOK’s tar­get of 2 per cent.

“The BOK is charged with sup­port­ing the econ­omy and sus­tain­ing con­sumer prices and fi­nan­cial sta­bil­ity at the same time,” said Gov­er­nor Lee.

South Korea will seek dras­tic dereg­u­la­tion and pro­vide sup­port to fos­ter in­no­va­tive growth, the coun­try’s fi­nance min­istry said yes­ter­day.

Un­der a set of sup­port mea­sures, the gov­ern­ment will pro­vide fund­ing and other in­cen­tives to eight key sec­tors such as smart farms, smart cities, fin­tech, drones and elec­tric ve­hi­cles and ar­ti­fi­cial in­tel­li­gence. — YON­HAP

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