South Korea keeps interest rate at record low

11:27 | 14/05/2016 Global Economy

The Bank of Korea (BOK) keeps the benchmark inter-bank lending rate at 1.5 per cent for the 11th straight month.

South Korea keeps interest rate at record low

South Korea's central bank on Friday (May 13) kept its record-low interest rate unchanged for an 11th straight month, despite a slowdown in economic growth.

The Bank of Korea (BOK) has kept the benchmark inter-bank lending rate at 1.5 per cent since June last year.

The latest decision came as Asia's fourth-largest economy struggles with growing jobless woes, mounting consumer debt and falling exports in the face of slowing global demand.

Exports, which account for nearly half of the country's economy, fell 11 per cent in April from a year ago - the 16th straight month of decline.

Collective household debt stood at a record high of around US$1.0 trillion at the end of December, while the jobless rate among South Koreans aged under 30 was stuck above 10 per cent in April.

The IMF last month slashed the country's growth prospects for this year to 2.7 per cent from the previous 3.2 per cent forecast, citing slowing demand in China - the South's top export market.

"The economic slowdown in China has shown signs of easing a bit, but economic growth in other emerging market economies has continued to slow, centring around natural resource-exporting countries," the BOK said in its rate statement on Friday.

While forecasting a "modest improvement" in the domestic economy, the statement said the bank "judges the uncertainties surrounding the growth path to still be high."

The government is pushing to streamline indebted and unprofitable companies, and analysts surveyed by Bloomberg News forecast the central bank may cut rates again before long to combat risks during the restructuring process.

The South Korean government vowed last month to restructure the country's ailing shipbuilding and shipping sectors that have been haemorrhaging cash due to slumping demand and competition from China./.

 

Source: Channelnewsasia/AFP/ek

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