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S. Korean economy faces strong headwinds: BOK chief

All Headlines 15:17 May 17, 2018

SEOUL, May 17 (Yonhap) -- South Korea's central bank chief said Thursday that strong headwinds at home and abroad are putting Asia's fourth-largest 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) Gov. 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 four-year term on Thursday. She is the second female member of the BOK board in its history.

"Uncertainties are still high as major economies are going through monetary normalization 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 percent in the first quarter, a turnaround from a 0.2 percent drop in the previous quarter. The BOK said the first-quarter figure is in line with the BOK's forecast of 3 percent 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 labor 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 percent for months, far lower than the BOK's target of 2 percent.

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

Bank of Korea (BOK) Gov. Lee Ju-yeol (R) shakes hands with Lim Ji-won, new BOK monetary policy board member, in a ceremony held at the central bank's Seoul headquarters on May 17, 2018, in this photo provided courtesy of the BOK. (Yonhap)


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