South Korean Central Bank Lowers Growth Forecast

South Korea’s central bank trimmed its growth forecast for the country’s economy on Thursday, citing the instability in Chinese markets.

The Bank of Korea predicting that Asia’s fourth-largest economy will grow 3.0 percent this year, down from an earlier estimate of 3.2 percent. Bank of Korea Gov. Lee Ju-yeol said the volatility in Chinese financial markets and a sharp drop in the South Korean currency were behind the revision.

The central bank said a recovery in consumer spending could be limited by the phase-out in consumption tax cuts and slowing sales of housing markets. Private capital spending will likely see slower growth due to uncertainties at home and abroad, it added.

The bank’s outlook is more optimistic than private economic research centers but is broadly in line with the financial ministry’s forecast.

Still, its downward revision is the latest reminder that the once dynamic Asian economy is losing steam.

South Korean manufacturing companies that used to fuel growth and development of the country with exports of ships, cars, steel, televisions and memory chips are quickly losing edge, coming under threats from Chinese companies.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza