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S. Korea's industrial output unlikely to keep growth momentum: foreign IBs

All Headlines 10:12 April 02, 2016

SEOUL, April 2 (Yonhap) -- South Korea's industrial output posted better-than-expected gains in February, but it is not likely to maintain sustained growth amid the economic slowdown, foreign investment banks (IBs) said Saturday.

The country's industrial output rose 2.4 percent in February from a year earlier, a turnaround from a 2.2 percent on-year decline in the previous month, according to a government report. It rose 3.3 percent on-month in February, the highest since September 2009.

Goldman Sachs and Citi Bank said that South Korea's industrial output posted a temporary rebound, putting pressure on the central bank to cut the key rate in the second quarter, according to reports by foreign IBs compiled by the Korea Center for International Finance.

The South Korean economy is slowing down as its exports have dropped for the 15th straight month since January 2015, the longest-ever losing streak. The country's outbound shipments fell 8.2 percent on-year in March.

Citi Bank said that despite a rebound in the manufacturing sector, there is a slim chance that momentum for economic recovery would be sustained.

The trend of falls in exports and weak private spending are putting pressure on the Bank of Korea (BOK) to slash the key interest rate in coming months, experts said.

The BOK froze the key interest rate at a record low 1.5 percent for the ninth consecutive month in March. The BOK's polity meeting will be held on April 19.

Barclays said that gains in exports and the government's temporary cut in consumption taxes contributed to a rebound in the industrial output in February.

sooyeon@yna.co.kr
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