SEOUL : South Korea's top government research body has cut its economic growth forecast for this year to 1.5 per cent from its earlier view of 1.8 per cent, saying a deeper and longer export slump than previously expected is likely to offset resilient private consumption.
The Korea Development Institute's latest projection compared with the 2.6 per cent that Asia's fourth-largest economy posted last year which matched the average growth rate of the decade through 2022.
It also cut its inflation forecast to 3.4 per cent from the previous 3.5 per cent, while recommending the Bank of Korea maintain a monetary policy skewed toward containing inflation that is far beyond the central bank's 2 per cent target.
Still, the agency stopped short of calling for additional interest rate increases as economists generally see the central bank's rate-hike cycle as over after a combined 300 basis-point rise conducted since August 2021.
The Bank of Korea has forecast this year's economic growth at 1.6 per cent but its governor, Rhee Chang-yong, in April said the bank would likely lower the forecast at a regular update on May 25.