BOK keeps 2.1% growth outlook for Korea’s GDP in 2024

BOK Governor Lee Chang Yong. [Photo by Press Corp.]

The Bank of Korea (BOK) decided to maintain its real gross domestic product (GDP) growth forecast for South Korea at 2.1 percent for 2024, according to the revised economic outlook announced on Thursday.

This projection aligns with the GDP forecast provided in November 2023 and follows a series of adjustments made by the central bank, which had revised the growth outlook for 2024 in February (2.4 percent), May (2.3 percent), August (2.2 percent), and November (2.1 percent) of the previous year.

The BOK forecast is slightly lower than the figures presented by other organizations, including the International Monetary Fund (IMF), which suggested a growth rate of 2.3 percent, as well as the 2.2 percent from the Korean government, the OECD, and the Korea Development Institute (KDI).

In terms of inflation, the BOK has opted to maintain its consumer price index (CPI) outlook for the year at the existing 2.6 percent. Despite anticipating a mild deceleration in the inflation rate during the first half of this year, the BOK remains cautious due to ongoing uncertainties, especially related to the trajectory of international oil prices.

Earlier in the day, BOK maintained the key interest rate at 3.5 percent for a ninth consecutive time, maintaining a trend that began in February 2023.

The decision was reached during the second rate-setting session of the year by the Monetary Policy Board on Thursday, showcasing the central bank’s commitment to its current policy amid economic uncertainties. The BOK’s decision to freeze the key interest rate is reflective of the ongoing economic challenges, including the persistent growth of household debt and concerns about inflation. Despite a drop in inflation to the two-percent range in January 2024, the BOK will remain vigilant as inflation could rebound at any time.