The Bank of Korea (BOK) may join the sanguine outlook of economy growing in 4 percent range this year – a pace not seen in more than a decade – in strong rebound from a 1.0 percent contraction last year, given the staggering rebound in exports.
The BOK issues revised economic outlook on Thursday after holding a monetary policy meeting.
The bank on Feb. 25 projected the country’s economy to expand 3.0 percent this year. But exports, the country’s main growth driver, have been rising much faster than expected as the global demand recovers rapidly from Covid-19 fallouts.
Exports in the first 20 days of May amounted to $31.12 billion, up 53.3 percent from the same period a year earlier. Daily exports jumped 59.1 percent on year to suggest a hot streak on the external trade front. Exports came to $51.19 billion for April, surging 41.1 percent against a year earlier in the strongest on-year jump since January 2011. Daily exports averaged at $2.13 billion, up 29.4 percent on year.
The bank’s revised economic growth outlook will also factor in the expected benefits from the government’s 15 trillion won ($13 billion) supplementary budget, approved in late March, to finance Covid-19 relief programs.
Korean President Moon Jae-in in early April projected the economy could grow above 4.0 percent, which would be the fastest in 11 years.
His optimism was echoed by a number of economists.
The Korea Capital Market Institute on Tuesday said it revised up the country’s growth outlook by 1 percentage point to 4.3 percent. Korea Institute of Finance on May 9 forecast 4.1 percent growth, up 1.5 percentage points than its previous projection.
Global financial service firm JP Morgan also has adjusted up its projection for the Korea’s economic growth to 4.6 percent from previous 4.1 percent, and Seoul-based LG Economic Research Institute has raised its forecast to 4.0 percent from earlier 2.5 percent.
The BOK could keep growth estimate more conservatively between 3.5 percent and 4.0 percent, given its cautious nature, said Cho Young-moo, a senior researcher at LG Economic Research.
A senior official at the BOK said a growth of over 4.0 percent is achievable if growth stays above 0.7 percent per quarter after the 1.6 percent gain in the preliminary gross domestic product data for the first quarter.
[? Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]