S Korea central bank holds interest rates unchanged at 3%

13 September 2012 08:42  [Source: ICIS news]

SINGAPORE (ICIS)--South Korea’s central bank said on Thursday it is holding key interest rate steady as it further assesses the impact of the eurozone debt crisis on the global economic recovery, which has already weighed heavily on the country’s chemical exports.

“The monetary Policy Committee of the Bank of Korea (BOK) decided today [Thursday] to leave the Base Rate unchanged at 3.00%,” the central bank said in a statement.

The pace of the global economy is expected to be very modest going forward, with downside risks to growth forecast to be large owing mainly to the “spillover of the euro area fiscal crisis to the real economy”, it said.

The economic recovery in the US “has weakened somewhat and the sluggishness of economic activities in the euro area have deepened”, the central bank said.

“Growth has continued to slow in emerging market countries as well, due mostly to the impact of the economic slumps in advanced countries,” it added.

South Korea earlier this week announced a won (W) 5,900bn ($5.24bn) stimulus package aimed at boosting economic growth, according to media reports.

This follows the W8,500bn stimulus package announced in June this year to spur the economy in the latter half of 2012, they said.

The slowdown in external demand because of the global economic slowdown and the effect of typhoon Bolaven led to a decrease in both exports and imports in August this year, according to the Ministry of Knowledge Economy (MKE) in an earlier statement.

Overall exports slipped by 6.2% year on year to $43bn in August, while imports fell by 9.8% to $40.9bn, it said. Shipments to both the EU and the US dipped in August.

South Korea’s petrochemical exports fell by 12.3% year on year to $3.6bn in the first twenty days of August, the MKE said.

Meanwhile, inflation in South Korea is forecast to pick up going forward on the back of the recent damages brought upon by typhoons and the volatility of oil and grain prices but is expected to stay below the central bank’s 3% target for the time being, the BOK added.

($1 = W1,127)

By: Nurluqman Suratman

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly