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(LEAD) BOK cuts growth outlook to 2.1 pct on fallout from coronavirus

Economy 11:07 February 27, 2020

(ATTN: UPDATES with more details, additional information, updated figures for COVID-19 infection cases in paras 3-7, 12)
By Byun Duk-kun

SEOUL, Feb. 27 (Yonhap) -- South Korea's central bank lowered its growth estimate for the year by 0.2 percentage point to 2.1 percent on Thursday as the fast-spreading coronavirus may have a far-reaching impact on Asia's fourth-largest economy.

The downward revision came as the COVID-19 outbreak is feared to badly hurt the economy, which was earlier expected to grow 2.3 percent this year.

The photo taken Feb. 27, 2020 shows a warning sign posted at a nursing home in Ulsan, located some 400 kilometers southeast of Seoul, that has been shut down due to the infection of a worker there by the new coronavirus. (Yonhap)

The BOK noted the virus outbreak has already adversely affected the country's consumption and exports and may continue to do so down the road.

"Although the sluggishness in facilities investment has eased, consumption has contracted and exports have slowed, owing to the spread of the COVID-19 outbreak," the BOK monetary policy board said in a statement explaining its decision to keep the key rate frozen at 1.25 percent.

"As it is expected that domestic economic growth will be moderate and it is forecast that inflationary pressures on the demand side will remain at a low level, the board will maintain its accommodative monetary policy stance," it added.

Still, the central bank estimated the country's consumer prices to rise 1.0 percent this year as forecast earlier.

It also kept its 2021 growth estimate intact at 2.4 percent.

Last year, the economy grew 2 percent, marking the slowest rise in a decade, largely due to the lengthy trade row between the United States and China -- the country's top two trading partners -- and an extended slump in chip prices.

The county's exports sank by more than 10 percent last year.

Other private economic institutes have already cut their own economic outlook for the economy.

Global ratings agency Moody's has lowered its own growth outlook for the country to 1.9 percent from 2.1 percent, while Fitch Solutions has reduced its growth estimate by 0.3 percentage point to 2.2 percent from 2.5 percent forecast earlier.

As of Thursday, South Korea has reported 1,595 confirmed cases of COVID-19 with 12 deaths.

bdk@yna.co.kr
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