Some board members of the Bank of Korea expressed concerns that a much-coveted recovery in Asia's fourth-largest economy may not take place in the second half of the year, making it more difficult for South Korea to meet its growth target, when they made a rate-freezing decision last month, according to meeting minutes released Tuesday.
In an April policy rate-setting meeting, the BOK's seven-member monetary policy committee unanimously decided to hold the policy rate steady at 1.75 percent. It has been unmoved since the panel raised the rate by a quarter percentage point in November last year.
The government has proposed a 6.7 trillion-won ($5.8 billion) supplementary budget bill to boost the economy, but a BOK board member was skeptical whether it would help South Korea achieve its growth target this year.
"Despite the supplementary budget, the South Korean economy will be negatively affected by a global economic slowdown," a BOK member was quoted as saying.
Their skeptical assessment came as BOK Gov. Lee Ju-yeol and policymakers predict a modest recovery down the road. Lee even ruled out the possibility of a rate cut after the central bank froze the rate.
In April, the central bank cut its growth outlook for the year to 2.5 percent from January's 2.6 percent expansion estimate. For next year, the bank maintained its earlier estimate of 2.6 percent.
The economy expanded 2.7 percent in 2018, down from a solid 3.1 percent the previous year.
The BOK's latest forecast for this year is lower than the finance ministry's growth target of between 2.6 percent and 2.7 percent and the International Monetary Fund's 2.6 percent prediction.
"There are significant uncertainties about the likelihood of meeting a growth target this year," another BOK member said, according to the minutes.
Last month, the IMF slashed its global economic growth outlook for this year and warned that growth could further slow amid trade rows and uncertainties over the British exit from the European Union.
The global economy is expected to grow 3.3 percent this year, the IMF predicted, marking the weakest expansion since 2016.
South Korea's exports, the key economic driver, fell for the fifth straight month in April, while employment has been sluggish for more than a year.
Along with these external and internal troubles, panel members noted that consumer prices have remained so low for long enough that it could deal a blow to Asia's fourth-largest economy.
South Korea's consumer price growth stayed below the 1 percent threshold for the fourth consecutive month in April due to a decline in oil prices and service charges.
Consumer prices moved up 0.6 percent in April from a year earlier, and the reading is the lowest for any April since 2015, when the corresponding figure stood at 0.4 percent, according to Statistics Korea. (Yonhap)