South Korean central bank cuts country's growth outlook again

July 13, 2012, Friday/ 12:19:00

South Korea's central bank on Friday lowered the country's 2012 growth outlook by a wider-than-expected margin, a day after trimming its key rate to guard against fallout from Europe's fiscal crisis.

The Bank of Korea said the South Korean economy is forecast to expand 3 percent this year from a year ago, further reducing outlook from its April forecast of 3.5 percent. The central bank cited nagging debt woes in Europe hitting exports, as well as lingering household debt that is putting pressure on domestic spending in Asia's No. 4 economy. The revised outlook will mark South Korea's slowest annual growth since 2009, when its economy grew 0.3 percent in the wake of US-sparked global financial turmoil. An outlook cut was widely expected after the central bank trimmed its key interest rate for the first time in more than three years, by a quarter of a percentage point to 3 percent, on Thursday. Kim Choong-soo, the Bank of Korea governor, said the rate cut was a pre-emptive move to buoy growth as the actual growth in the South Korean economy is feared to trail its potential for a while.

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