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BOK chief sticks with 1.6% growth projection, calls for extra budget

Published: 18 Feb. 2025, 17:39

SHIN HA-NEE
[email protected]

Bank of Korea Gov. Rhee Chang-yong speaks during a parliamentary inquiry during a plenary meeting of the Strategy and Finance Committee of the National Assembly in western Seoul on Feb. 18. [NEWS1]

Bank of Korea (BOK) Gov. Rhee Chang-yong tentatively suggested that the country’s economy will grow 1.6 percent this year, reiterating the central bank’s adjusted January projection ahead of the official outlook revision slated for Feb. 25.

The chief central banker also reaffirmed his stance advocating for the passage of a supplementary budget worth around 15 trillion won ($10.4 billion) and 20 trillion won.

“The BOK has been adjusting its growth outlook this year to around 1.6 percent due to multiple factors including not only political uncertainties, but also U.S. economic policies and the Federal Reserve’s monetary policy direction,” Rhee said during a parliamentary inquiry by the National Assembly’s Strategy and Finance Committee in western Seoul on Tuesday.

The bank is set to announce its revised growth outlook for this year on Feb. 25 along with its key interest rate decision, coming not long after the central bank lowered its growth projection from the previous 1.9 percent to a range of 1.6 to 1.7 percent in a rare January projection.

The BOK cited political uncertainties surrounding President Yoon Suk Yeol’s martial law declaration and its impact on consumer confidence for its tentative January revision.

Regarding a question on the supplementary budget, Rhee stood by his previous comment made on Jan. 16 that a supplementary budget of around 15 to 20 trillion won would be appropriate, saying that the estimate “was made in consideration of long-term fiscal stability.”

Nevertheless, Rhee added that “passing a supplementary budget alone cannot solve the issues involving small business owners.”

During the inquiry, the BOK chief faced backlash from People Power Party (PPP) lawmakers over his comments defending acting President Choi Sang-mok’s decision to name two Constitutional Court justices.

PPP lawmaker Rep. Park Dae-chul criticized Rhee for making “inappropriate comments” that can be “misinterpreted as a political intervention,” urging political neutrality.

“I haven’t made any comments, even any regarding budgets except for that one a month after the martial law declaration,” the governor said, defending his previous comment as an effort to highlight the importance of maintaining the commander-in-chief’s leadership for economic stability.

BY SHIN HA-NEE [[email protected]]