The Bank of Korea Says "Our Economic Growth Rate This Year May Exceed 2.1%"

by Lee Changhwan

Published 12 Apr.2024 11:12(KST)

Bank of Korea Governor Lee Chang-yong is presiding over the Monetary Policy Committee meeting held on the 12th at the Bank of Korea in Jung-gu, Seoul. Photo by Joint Press Corps

The Bank of Korea mentioned the possibility that South Korea's economic growth rate this year may exceed the initially expected 2.1%.

In the 'Economic Situation Assessment' report released on the 12th, the Bank stated that this year's growth rate is expected to generally align with the 2.1% forecast made in February, but considering the rapid export recovery, there is also a possibility of somewhat exceeding it.

The domestic economy is seeing a rapid recovery in exports due to the rise in the IT sector and the strong U.S. economy; however, the impact of elevated living costs and interest rates continues, making it difficult for households and domestic companies to feel a recovery momentum.

Private consumption momentum is weak, mainly in goods consumption, due to high inflation and high interest rates, but it is expected to gradually improve as household income conditions improve in the future. Goods exports are rapidly improving, centered on semiconductors, and are expected to maintain a solid growth trend mainly in the IT sector going forward.

The consumer price inflation rate is expected to gradually slow down, mainly in core inflation, but the trend may not be smooth for the time being.

The annual inflation rate this year is expected to generally align with the previous forecast levels of 2.6% for consumer prices and 2.2% for core prices, but uncertainties related to geopolitical risks, agricultural product price trends, and domestic and international economic conditions remain significant.

The current account balance is predicted to increase its surplus as exports show a favorable trend supported by the recovery of the IT sector and strong growth in the U.S., while imports continue to decline. This indicates that the current account surplus will be larger than the initially expected $52 billion.