BOK cuts '22 growth outlook to 2.7% and ups inflation estimate to 4.5%

[Source: Bank of Korea]

The Bank of Korea (BOK) on Thursday revised its economic growth forecast to 2.7 percent from 3.0 percent and raised inflation forecast to 4.5 percent for this year as across-the-board price strengthening is expected to weigh over the resource-poor economy throughout the year.

Under the revised outlook, the BOK projected the Korean economy to expand 2.7 percent this year, slower than 3.0 percent estimated in February. For next year, it expected growth at 2.4 percent.

The BOK’s downgrade would likely be followed by other institutions including the Korean government. The government so far maintains growth outlook of 3.1 percent for this year, the Organization of Economic Cooperation and Development’s 3.0 percent and Asia Development Bank 3.0 percent.

State think tank Korea Development Institute earlier lowered its outlook on the Korean economy from 3.0 percent to 2.8 percent.

The BOK raised annual inflation estimate sharply to 4.5 percent from 3.1 percent as near 5-percent inflation rate won’t easily come down from worsening grain and fuel conditions from protracted Russian war with Ukraine.

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