BOK Slashes Growth Forecast

The Ministry of Strategy and Finance expects Korea's economy to grow three percent this year, but the Bank of Korea now forecasts a mere 2.7 percent, down from a 2.8 percent estimate in July.

The BOK also slashed its growth outlook for next year from 3.3 to 3.2 percent.

The BOK said the lowered forecast is not due to projections that the economy will get worse later this year but due to the huge impact the Middle East Respiratory Syndrome outbreak had in June.

The BOK forecast the economy will grow three percent in the second half of this year. BOK Governor Lee Ju-yeol told reporters, "The local economy will be gradually recovering on revived domestic demand."

But this year's current account surplus is projected to total US$110 billion, higher than the original forecast of $98 billion. Although exports remain weak, imports have dropped at a faster clip.

The BOK forecast inflation at only 0.7 percent this year thanks to a decline in international oil prices.

The central bank’s monetary policy committee unanimously decided to keep the base interest rate frozen at a record-low 1.5 percent for a fourth month.

Lee said although risks remain, including a slowing Chinese economy and the chance of a U.S. interest rate hike, the Korean economy is sustaining a recovery.