`Downside risks to South Korean economy remain high’

December 8th, 2011 - 1:34 pm ICT by IANS  

Seoul, Dec 8 (IANS) Downside risks to the South Korean economy remained high due to external uncertainties such as Europe’s debt crisis and economic slowdown in major economies, the central bank said Thursday.

“The domestic economy will not deviate significantly from its long-term trend of growth going forward, but downside risks to growth remain high due to the impact of external risk factors,” the Bank of Korea (BOK) said in a statement after the December monetary policy meeting.

The central bank said the global economy was expected to recover at a moderate pace, citing downside risk factors such as the sovereign debt crisis in Europe, the possible economic slump in major economies and the possible unrest in international financial markets.

The BOK left the 7-day repo rate unchanged at 3.25 percent this month, keeping its rate freeze stance for the sixth consecutive month, reported Xinhua.

Touching on inflation, the BOK noted that consumer price growth would slow due largely to the easing of upward pressure on international commodity prices, saying that factors, including the declines in agricultural product prices and the base effect from last year, would work to stabilize prices.

The bank, however, stressed that the pace of decline in the inflation rate would be moderate given factors such as the public utility charge hikes and ongoing high inflation expectations.

The nation’s consumer prices jumped 4.2 percent in November from a year earlier, up from a 3.6 percent on-year gain tallied in the previous month. Core consumer prices, which exclude volatile agricultural and oil product prices, advanced 3.5 percent on-year last month, up from a 3.2 percent rise a month earlier.

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