The South Korean Central Bank cut its growth outlook for this year and said inflation was picking up more slowly than expected, after leaving interest rates unchanged.
Governor Lee Ju Yeol said today the central bank lowered its growth forecast for 2014 to 3.8% from 4%. The BOK held the seven-day repurchase rate at 2.5% for a 14th straight month, it said in a statement in Seoul, according to South Korean news agency (Yonhap).
The central bank slashed its consumer spending growth estimate for this year to 2.3% from an earlier estimate of 3.1%.
The BOK, however, projected growth to gradually pick up in the second half on the back of improved sentiment and a mix of factors such as the Incheon Asian Games and a resumption of school field trips that had ceased after the ferry sinking.
The central bank's revised inflation outlook for the year came in at 1.9%, down from an earlier forecast of 2.1%. The outlook for next year also inched down to 2.7% from 2.8%.
The BOK cited weak agricultural product prices, a strengthening won and a delay in public fee hike as some of the factors that prompted the central bank to lower the inflation forecast.
Current account surplus was projected to reach US $84 billion this year and $70 billion for 2015. Both figures are higher than earlier projections of $68 billion and $58 billion.
In 2013, South Korea saw its surplus widen to a record $80 billion on solid exports.
The Thursday revision is the latest in a series of downward adjustments on the course of Asia's fourth-largest economy. Last month, the Korea Development Institute cut its estimate to 3.7% from 3.9% while the Korea Institute of Finance lowered its outlook to 4.1% from 4.2%.
The finance ministry is also expected to cut its growth outlook for the country, with the details to be included in the second-half economic management plan. Government sources and other experts say the government will lower its growth outlook to the 3.5-3.7% range from 3.9%.