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BOK chief says US expansionary fiscal policies to help world economy

The governor of South Korea's central bank has said that the US expansionary fiscal policies could help the world economy and that South Korea's exports could continue to improve.

BOK Gov. Lee Ju-yeol said Friday that South Korea's exports have picked up due to a recovery of the world economy.

(Yonhap)
(Yonhap)

Lee made the comments in a meeting with South Korean reporters after attending the Group of 20 finance ministers and central bank governors' meeting in Washington.

South Korea's exports rose for the fifth straight month in March on the back of brisk sales of chips, displays and cosmetics.

Outbound shipments came to an over two-year high of $48.9 billion last month, up 13.7 percent from $43 billion tallied a year earlier, according to the Ministry of Trade, Industry and Energy.

South Korea's exports have been on a steady rise since November on an uptick in oil prices. Last month marked the first time since December 2011 that exports have risen for five consecutive months.

Lee said a key factor in South Korea's economy will be new economic policies of the new government. South Koreans are set to go to the polls on May 9 to elect a new president.

Moon Jae-in, the presidential candidate of the liberal Democratic Party and the front-runner in opinion polls, has vowed to double the rate of increase in the government's fiscal spending and redirect government spending to create more jobs and support corporate employees.

Meanwhile, liberal presidential hopeful Rep. Ahn Cheol-soo has promised to grant more power to the antitrust watchdog and improve corporate governance to break corruptive relations between the government and large businesses.

Ahn has also pledged to improve the governance system of local family-controlled conglomerates and to raise the minimum hourly wage from the current 6,470 won ($5.67) to 10,000 won within his five-year term if elected.

Ahn is seen to be in a two-way race for the country's top office with Moon.

Asked whether the BOK will raise its key rate, Lee told reporters that a US rate hike is one of the key considerations, but he said it is desirable for the BOK to take into account macroeconomic situations and risks in financial stability.

Last month, the US Federal Reserve raised its key rate by a quarter of a percentage point to a target range of 0.75 to 1 percent. It also signaled that additional hikes would be made in a gradual manner later this year.

The BOK has said that the US rate increase does not necessarily mean it will immediately raise its interest rates.

The BOK kept its policy rate at an all-time low of 1.25 percent for the 10th consecutive month in April after dropping the rate to its lowest level to bolster Asia's fourth-biggest economy. (Yonhap)

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