2020 growth outlook slashed to minus 1.3 percent by central bank

Bank of Korea's Monetary Policy Board holds meeting on Thursday. [BANK OF KOREA]

The Bank of Korea significantly lowered its 2020 GDP growth forecast from negative 0.2 percent to negative 1.3 percent, factoring in the latest wave of Covid-19 infections.

It also held the base rate at 0.5 percent, maintaining a wait-and-see stance amid an overheated real estate market and rising stock prices.

The growth outlook cut was largely expected as the number of new daily Covid-19 cases has returned to triple digits and has remained there.

Newly reported cases hit 441 on Thursday, the first time the daily reading has been above 400 since March 7.

When the central bank released the minus 0.2 percent growth forecast in May, it based its outlook on the assumption that the outbreak peaked in the second quarter and that infection numbers would drop throughout the second half.

Under the bank's worst-case scenario, where the country's infection numbers continue to increase until the end of the third quarter, Korea's economy was forecast to contract by 1.8 percent in 2020.

The OECD recently revised up Korea's growth outlook to negative 0.8 percent on the assumption of no second wave. It said that if the number of cases increased, the economy would contract by 1.8 percent in 2020.

Korea's central bank is now forecasting 2.8 percent growth in 2021.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]