[BOJ Big Step] Lee Chang-yong "This Year's Economic Growth Rate Below May Forecast... Mid-2% Range"

Bank of Korea Governor Lee Chang-yong is answering questions from the press at the Monetary Policy Direction press conference held at the Bank of Korea in Jung-gu, Seoul on the 13th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Seo So-jeong] The Bank of Korea expects this year's economic growth rate to fall slightly short of the May forecast level of 2.7%.

On the 13th, the Bank of Korea stated in its 'Recent Domestic and International Economic Trends' report, "There is high uncertainty regarding the future growth path due to major countries' interest rate hikes and the Ukraine situation."

On the same day, Lee Chang-yong, Governor of the Bank of Korea, said, "This year's domestic economic growth rate is expected to be in the mid-2% range, and next year it is expected to grow close to 2%," adding, "Since the growth rate is unlikely to fall below 2% at this point, it is not yet time to worry about stagflation." However, he added, "If the growth rate falls below 2% due to the Ukraine situation, it would be appropriate to adjust policies accordingly."

Early easing of the Ukraine situation, expansion of China's economic stimulus measures, and increased investment in new growth sectors are considered upside risks, while accelerated interest rate hikes by major countries, prolonged Ukraine conflict, and continued lockdown measures in China are seen as downside risks.

This year's consumer price inflation rate is expected to significantly exceed the May forecast level of 4.5%, due to continued high oil prices and increased demand-side inflationary pressures following the lifting of social distancing measures. Governor Lee predicted, "The peak of high inflation will be around the end of the third quarter or the fourth quarter of this year," and added, "Afterwards, it is expected to stabilize."

However, uncertainties such as international oil prices remain variables. Governor Lee said, "Just a month ago, oil prices rose to $140 per barrel, but from the day before yesterday, global recession concerns increased, causing oil prices to fall below $100," adding, "Considering oil futures prices, it is predicted that by the end of the year prices will be around $90, and in the next year around the mid-$80s, with the third or fourth quarter being the peak of inflation."

He also expected the current account balance to maintain a surplus trend, but the magnitude is expected to be somewhat reduced compared to the previous forecast level of $50 billion.

This content was produced with the assistance of AI translation services.