South Korea keeps interest rate at record low

GMT 08:27 2016 Friday ,13 May

Arab Today, arab today South Korea keeps interest rate at record low

Collective household debt in South Korea stood
Seoul - AFP

South Korea's central bank on Friday kept its record-low interest rate unchanged for an 11th straight month, despite a slowdown in economic growth.

The Bank of Korea (BOK) has kept the benchmark inter-bank lending rate at 1.5 percent since June last year.

The latest decision came as Asia's fourth-largest economy struggles with growing jobless woes, mounting consumer debt and falling exports in the face of slowing global demand.

Exports, which account for nearly half of the country's economy, fell 11 percent in April from a year ago -- the 16th straight month of decline.

Collective household debt stood at a record high of around $1.0 trillion at the end of December, while the jobless rate among South Koreans aged under 30 was stuck above 10 percent in April.

The IMF last month slashed the country's growth prospects for this year to 2.7 percent from the previous 3.2 percent forecast, citing slowing demand in China -- the South's top export market.

"The economic slowdown in China has shown signs of easing a bit, but economic growth in other emerging market economies has continued to slow, centring around natural resource-exporting countries," the BOK said in its rate statement on Friday.

While forecasting a "modest improvement" in the domestic economy, the statement said the bank "judges the uncertainties surrounding the growth path to still be high."

The government is pushing to streamline indebted and unprofitable companies, and analysts surveyed by Bloomberg News forecast the central bank may cut rates again before long to combat risks during the restructuring process.

The South Korean government vowed last month to restructure the country's ailing shipbuilding and shipping sectors that have been haemorrhaging cash due to slumping demand and competition from China.

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