Loading, Please Wait...
SEOUL, South Korea (AP) — South Korea's central bank trimmed its growth forecast for the country's economy on Thursday, citing the instability in Chinese markets.
The Bank of Korea predicting that Asia's fourth-largest economy will grow 3.0 percent this year, down from an earlier estimate of 3.2 percent. Bank of Korea Gov. Lee Ju-yeol said the volatility in Chinese financial markets and a sharp drop in the South Korean currency were behind the revision.
The central bank said a recovery in consumer spending could be limited by the phase-out in consumption tax cuts and slowing sales of housing markets. Private capital spending will likely see slower growth due to uncertainties at home and abroad, it added.
The bank's outlook is more optimistic than private economic research centers but is broadly in line with the financial ministry's forecast.
Still, its downward revision is the latest reminder that the once dynamic Asian economy is losing steam.
South Korean manufacturing companies that used to fuel growth and development of the country with exports of ships, cars, steel, televisions and memory chips are quickly losing edge, coming under threats from Chinese companies.
Exports last year dropped 8 percent from a year earlier. The country's trade ministry said exports will recovery slightly this year, gaining 2 percent from last year.
South Korea's economy has been increasingly relying on domestic demand for growth as exports remained weak. That trend is likely to continue this year, the central bank said.