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BOK chief says economic slump may last but depends on U.S.-China dispute

All Headlines 10:00 October 08, 2019

SEOUL, Oct. 8 (Yonhap) -- The ongoing slump facing South Korea and the rest of the world is widely expected to continue for some time, but the duration and degree of its impact will largely depend on how the trade conflict between the world's two largest economies will end, the chief of South Korea's central bank said Tuesday.

"The growth of the global economy is slowing down," Bank of Korea (BOK) Gov. Lee Ju-yeol told the parliamentary finance committee at the start of its annual audit.

"Such a slowdown is expected to continue for some time, and it seems the rate of such a slowdown will be greatly affected by the outcome of the U.S.-China trade negotiations and the course of the Chinese economy based on that outcome," the top central banker said.

Lee noted the Korean economy too has faced increased uncertainties stemming from the U.S.-China trade dispute.

"It appears the local economy will continue to face increased uncertainties in the future due to the slowing growth of the global economy and a delayed recovery of the semiconductor market," he said.

South Korea's exports have dropped for 10 consecutive months since December, partly led by significant cuts in outbound shipments of semiconductors, which account for nearly one quarter of its overall exports.

The local economy is also struggling with low inflation caused by sluggish consumption at home, but the BOK chief insisted prices will soon begin to rise.

The country's consumer prices dropped 0.4 percent from a year earlier in September.

Lee said the first negative growth in inflation was largely due to a base effect created by a surge in prices of agricultural products last year.

"The rise in consumer prices is expected to stay close to 0 percent for the next one or two months but to rebound around the end of the year and then climb up to the 1 percent range from next year," he said.


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