The Korean economy is expected to grow 2.1 percent this year, down from the previous forecast of 2.2 percent, scarred by President Yoon Suk Yeol’s botched attempt to declare martial law, the country’s top monetary policymaker said Wednesday.
Underpinning the pessimism is rapidly declining consumer confidence and negative economic indicators, despite export growth remaining within expectations.
The country’s creditworthiness should be robust, provided the opposition-controlled National Assembly reaches a bipartisan agreement on the budget followed by swift implementation, according to Bank of Korea (BOK) Gov. Rhee Chang-yong.
Signs of weakness in the economy can be countered by a stimulus package, with a policy focus on targeted assistance for the most vulnerable group of income earners and businesses.
“Retail spending including card usage is taking a dive to a greater degree than we expected,” Rhee said during a press conference, Wednesday.
The downward revision reflects the fourth quarter growth forecast certain to edge down to 0.4 percent from the previous 0.5 percent.
“The possibility of this year’s growth inching down to 2.1 percent is very high. As for next year, our initial forecast of 1.9 percent will be down due to the recently passed budget leading to about 0.06 percentage points in economic contraction.”
The country’s plunging currency against the dollar is not as great a source of concern compared to the unexpected political developments, with about 30 won in gains expected once the status quo returns to the pre-martial law market conditions, according to Rhee.
