Bank of Korea Governor Lee Ju-yeol said on July 23 that Japan’s export restrictions targeting South Korea were not sufficiently reflected in the bank’s economic forecasts released on July 18 and the restrictions can negatively affect South Korea’s economic growth rate this year.
On July 18, the central bank lowered its domestic growth estimate for this year from 2.5 percent to 2.2 percent. At that time, the governor mentioned that Japan’s export restrictions were partially reflected in the estimate.
When it comes to the possibility of an additional interest rate cut within this year, he said that monetary easing would continue to facilitate an economic recovery as he mentioned while cutting the benchmark rate on July 18. “We need to consider various factors such as real economic conditions and international financial conditions and, as such, nothing can be said for sure as of now,” he remarked, adding, “Still, we will need to mull over how to respond if Japan’s export restrictions are expanded.”
He also mentioned that no significant change has been detected in Japanese financial institutions in South Korea since the restrictions. “We have monitored their money flows and investment strategies for three weeks and those remain the same as before,” the governor explained, continuing, “The 2.2 percent estimate is much lower than the potential economic growth rate, and the role of finance is important in this situation although the Bank of Korea will keep focusing on assistance for economic recovery.”