Korean central bank governor mentions possibility of recession

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Korean central bank governor mentions possibility of recession

Published: 20 Dec. 2022, 11:28 Updated: 20 Dec. 2022, 13:33

Bank of Korea Gov. Rhee Chang-yong speaks at a press conference held to discuss inflation in central Seoul on Tuesday. [NEWS1]

Korea might be nearing a recession, Bank of Korea Gov. Rhee Chang-yong said during a press conference held in central Seoul on Tuesday.

Whether or not we are "headed toward a recession, it's borderline," the central banker commented.

Based on the wording of his statement, the timing of a possible recession is not clear, and the central bank has been asked for clarification.

“The economic situation in the first half of next year is projected to be difficult,” Rhee noted.

The implementation of central bank policy to tame inflation could “aggravate the recession” if the bank responds too late, but market trust could be lost if the bank responds too early, he added.

The banker said he will take into consideration the economy, the exchange rate and employment.

Rhee made the remarks at a conference held to discuss inflation this year and projections for next year.

Inflation was 5.1 percent through November this year. Annual inflation is projected to be the highest since the 7.5 percent recorded in 1998.

Rhee said the rate will continue in the 5-percent range, but is projected to fall gradually next year, though there are uncertainties as to how fast inflation will fall.

A decline in global energy production, sanctions against Russia and inflation expectations that remain high are some of the factors that add to the uncertainty.

BY JIN MIN-JI [jin.minji@joongang.co.kr]