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Bank of Korea forecasts GDP drop, cuts rate

Christian Fernsby ▼ | May 29, 2020
South Korea’s economy is expected to suffer its first annual contraction since the 1990s, the Bank of Korea forecast as it cut interest rates to a record low.
South Korea street
Annual contraction   South Korea street
The world’s 12th-largest economy is to shrink 0.2 percent, the central bank said, a dramatic downgrade from the 2.1 percent growth it had forecast in February.

Topics: Korea GDP

The bank cut its key interest rate by 25 basis points to 0.5 percent, joining other central banks moving to try to stem the economic effects of the pandemic, which analysts have said threatens to cause a global recession.

“The growth of the domestic economy has slowed significantly” due to the novel coronavirus, and is expected to be sluggish and unpredictable in the future, the central bank said in a statement.

“The employment situation has deteriorated,” with many in the service sector losing jobs, while “exports fell significantly,” it said.