SEOUL Dec 22 South Korea's central bank said on
Thursday the economy risks slowing down in 2017 and suggested
the government needs to step up fiscal stimulus to rev up
growth, with Governor Lee Ju-yeol signalling there was more room
to cut rates if needed.
In a statement prepared for a parliament session, the Bank
of Korea said there is a chance growth next year may slow below
an expected 2.8 percent for this year.
In embargoed remarks to journalists on Wednesday, BOK chief
Lee said downside risks would offset the positive impulse, and
pointed to the government's planned spending for next year as
being low in comparison to projected state income.
"I believe it is difficult to say next year's fiscal policy
is accommodative," said Lee.
"Many institutions say now is the time for fiscal policy to
do more. And I agree."
Lee also said the corporate restructuring this year in the
shipping and shipbuilding industries had not been carried out
Commenting on the sluggish economy, the central bank said in
a statement to parliament that it planned to keep its own policy
accommodative, and Lee indicated the BOK had more room to offer
stimulus if needed.
The central bank said it expects capital outflows to pick up
as interest rates rise in the United States.
The central bank held interest rates steady at 1.25 percent
for a sixth straight month in December, citing heightened
domestic and global uncertainty, including from the incoming
U.S. administration of Donald Trump.
The bank will next review policy on Jan. 13.
(Reporting by Christine Kim; Editing by Shri Navaratnam)