SEOUL, Feb. 23 (Yonhap) — South Korea’s economy is expected to stage a modest recovery, supported by exports and investment, but its job markets would recover at a slow pace as the coronavirus pandemic continues to hit the service sector, the head of the Bank of Korea (BOK) said Tuesday.
In a report to the National Assembly, BOK Gov. Lee Ju-yeol repeated that the central bank will continue its easing of the monetary policy to prop up the pandemic-hit economy.
“The domestic economy continues to show a trend of modest recovery, mainly due to exports and investment, while consumption remains sluggish,” Lee told lawmakers.
Lee said the BOK will step up efforts to stabilize financial markets, citing risks over financial imbalances from soaring asset prices and household debts.
Inflationary pressure remains weak as the pandemic weighs on consumer prices, but consumer prices are likely to rise above 1 percent as the economy recovers at a modest pace, Lee said.
To boost the pandemic-hit economy, the BOK cut the key rate to the all-time low in May last year after delivering an emergency rate cut of half a percentage point in March last year.
Experts said a rate freeze is anticipated this week, as economic uncertainty lingers amid a fresh surge of virus cases, while booms in asset markets, including the housing and stock markets, have warranted a close watch.
In a survey by Yonhap Infomax, the financial news arm of Yonhap News Agency, all 15 analysts polled predicted the BOK will freeze the base rate at its rate-setting meeting Thursday.
South Korea’s economy contracted 1 percent last year, marking the worst performance in over two decades, but it appears to have returned to a growth track on the back of a mild recovery in exports.
The number of employed people reached 25.8 million last month, 982,000 fewer than a year earlier, according to the data compiled by Statistics Korea. It marked the sharpest on-year fall since December 1998, when the country lost 1.28 million jobs in the wake of the Asian financial crisis.
The country has reported job losses every month since March last year, when the nation lost about 195,000 jobs, the first on-year job loss since 2009. For all of 2020, the nation shed the largest number of jobs since 1998.