A strong recovery in exports is expected to help South Korea’s economy grow at a faster-than-expected pace, but a raging fourth wave of COVID-19 infections is likely to weigh on the economy.
“While the economy has benefited from a consistently strong export performance, the domestic COVID-19 situation remained worrisome, necessitating extended social distancing rules, which moderated the gains from spending growth,” Moody’s Analytics said in a recent note.
“Notwithstanding this constraint, some improvement in the pace of employment, together with continued strength in trade, is expected to have lifted demand.”
Earlier this month, the BOK kept the base rate steady at a record low of 0.5 percent, but BOK Gov. Lee Ju-yeol adopted a more hawkish tone.
Lee said the BOK will review whether a policy adjustment is needed at next month’s rate-setting meeting, prompting some analysts to speculate that the central bank could raise its key rate in August.
The BOK “could raise its key rate within this year” if infections with the delta variant ease and prospects of an economic recovery become clear, Lee told reporters. (Yonhap)