BOK lowers the growth rate for 2024

The Bank of Korea has revised its economic projections, lowering the expected growth rate for 2024 from 2.2 percent to 2.1 percent. Simultaneously, inflation growth rates have been adjusted upward to 3.6 percent in 2023 and 2.6 percent in 2024. Analysts express concerns that prolonged high-interest rates and inflation could negatively impact economic growth.

In the latest economic outlook released on Thursday, the growth projection for the current year remained unchanged at 1.4 percent. However, the 2024 growth outlook has been reduced by 0.1 percentage point to 2.1 percent, marking the third consecutive cut following adjustments in May (2.3 percent) and August (2.2 percent).

During a press conference, BOK Governor Lee Chang-yong anticipated that the 2024 growth outlook would likely be below the August figure due to sustained austerity measures domestically and internationally, coupled with a sluggish recovery in consumption. Despite this, he noted a positive aspect, considering the declining growth outlook in major advanced economies like the United States. The BOK warned of the possibility of the 2024 growth outlook dropping below 1.9 percent if global oil prices exceed 90 dollars per barrel.

The inflation outlook for 2023 and 2024 was revised upward by 0.1 percentage point and 0.2 percentage points, respectively, reaching 3.6 percent and 2.6 percent. This adjustment is attributed to a slower-than-expected slowdown in inflation, primarily due to an increase in food prices. The central bank opted to maintain the benchmark interest rate at 3.5 percent for the seventh consecutive time.


dhlee@donga.com