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Bank of Korea forecasts S. Korea's economic growth at 3 pct in 2018
Last Updated: 2018-04-12 15:45 | Xinhua
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South Korea's central bank forecast on Thursday that the country's gross domestic product (GDP) would grow 3 percent in 2018 amid the mixed signs facing the export-driven economy.

Bank of Korea (BOK) Governor Lee Ju-yeol told a press conference after the rate-setting meeting that the BOK's growth outlook for this year was unchanged from the one estimated three months earlier. In 2017, the country's GDP rose 3.1 percent.

It was identical to the growth forecasts offered by the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD).

Local economic think tanks predicted lower figures than the BOK forecast. The state-run Korea Development Institute (KDI) set its outlook at 2.9 percent, and the private Hyundai Research Institute (HRI) and LG Economic Research Institute (LGERI) at 2.8 percent.

The BOK held a regular rate-setting meeting, leaving the benchmark rate unchanged at 1.5 percent. The bank raised the rate in November last year to the current level from an all-time low of 1.25 percent, the first rate hike in almost six and a half years.

The freeze in the BOK's growth forecast came amid the mixed signals surrounding the economy, which depends on exports for about half of its GDP.

Trade experts did not expect the current trade friction between China and the United States to develop into a trade war, but concerns lingered that the trade dispute between the world's top two economies would negatively affect global trade and hit hard the South Korean economy.

The trade friction had yet to affect the Asia's No.4 economy. South Korea's exports posted a double-digit growth for the first 10 days of April thanks to robust demand for locally-made semiconductors.

Despite the brisk export, labor market conditions worsened. The country's employment grew 112,000 in March from a year earlier, after rising 104,000 in February. The February growth was the lowest in eight years.

One out of four youths aged 15-29 were unemployed, though the government allocated a supplementary budget last year to create decent jobs for the younger generation. The government submitted a separate extra budget plan for this year to the National Assembly for job creation.

The lodging and food service industry was struggling with the falling number of Chinese travelers to South Korea, dragging down the recovery of domestic demand. The industry's growth rate was 2.2 percent in 2017, the lowest since 1998.

The number of Chinese tourists to South Korea tumbled 41.5 percent in February from a year earlier, after plunging 46 percent in January.

The eased geopolitical risks on the Korean Peninsula was a positive factor to the South Korean economy. The two Koreas agreed to hold a summit on April 27 at the border village of Panmunjom, which would mark the third-ever inter-Korean summit since the 1950-53 Korean War ended in an armistice.

Meanwhile, the BOK's outlook for this year's consumer price inflation was downgraded to 1.6 percent, marking the third straight downward revision since July last year.

Consumer prices rose 1 percent in January from a year earlier, posting the lowest gain in 17 months. It rebounded to 1.4 percent in February and 1.3 percent in March each, but it stayed below the BOK's inflation target of 2 percent.

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