Bank of Korea Governor Lee Chang-ryong: This year's economy may grow by 2.2%, cautious about fluctuations in the South Korean won exchange rate
Bank of Korea Governor Lee Chang-ryong stated that South Korea's economic growth rate this year may be close to 2.2%, lower than previous forecasts. Due to weak exports, GDP only grew by 0.1% in the third quarter, below market expectations. Lee Chang-ryong is cautious about exchange rate fluctuations, hinting at possible intervention in the foreign exchange market. The Bank of Korea has already lowered the benchmark interest rate to 3.25% and shifted its focus to economic growth. Although it is expected to keep the interest rate unchanged in November, speculation about further easing measures is increasing
According to the Wise Finance APP, Lee Chang-ryong, the Governor of the Bank of Korea, stated that South Korea's economic growth rate this year may be close to 2.2%, which is lower than previous forecasts. South Korean policymakers are closely monitoring the current economic health and remain vigilant about exchange rate fluctuations.
The Bank of Korea reported last week that due to weak exports, South Korea's Gross Domestic Product (GDP) in the third quarter only grew by 0.1% compared to the previous quarter, making the economic growth outlook less optimistic.
This result is significantly lower than the market's expected growth rate of 0.4%, prompting officials at the Bank of Korea to consider lowering the annual growth forecast of 2.4%. With inflation and household debt growth slowing down, the Bank of Korea lowered interest rates earlier this month, shifting the focus to economic growth.
Lee Chang-ryong told lawmakers on Tuesday that South Korea's economy may grow by 2.2% or 2.3% in 2024, still higher than the potential growth rate.
Due to the actual decline in exports last quarter, forecasting economic growth in 2025 has become more complex. Lee Chang-ryong mentioned that the results of the U.S. presidential election and overseas economic conditions are risks facing South Korea's exports and growth.
Speculation that Donald Trump, the Republican candidate, may win the U.S. presidential election has boosted the U.S. dollar and weakened the South Korean won. Lee Chang-ryong stated that policymakers are vigilant about exchange rate fluctuations and hinted that authorities may intervene in the foreign exchange market when necessary, saying they have enough "ammunition."
South Korean President Yoon Suk-yeol also discussed the issue of the won at the cabinet meeting that day. Yoon emphasized the importance of timely responses to prevent adverse effects on the economy from changes in exchange rates, supply chains, or oil prices.
The Bank of Korea began adjusting its policies on October 11th, lowering the benchmark interest rate to 3.25%, focusing on maintaining economic growth momentum like other central banks worldwide. Although most economists expect the Bank of Korea to keep rates unchanged at the November meeting, speculation about the Bank of Korea accelerating its easing measures has been increasing as data shows a slowdown in economic growth