BOK warns of low growth, low inflation for S. Korean economy

SEOUL, Dec. 18 (Yonhap) -- South Korea's economy may fall into an extended slump with low inflation if its potential growth continues to slide, a central bank report showed Wednesday.

In a report on price stabilization, the Bank of Korea (BOK) said it cannot rule out the possibility of Asia's fourth-largest economy facing the double whammy of low growth and disinflation over the mid to long haul if the country's growth potential does not improve.

The report said the effectiveness of the central bank's monetary policies may be curbed and asset prices may face upward pressure in such a scenario.

The BOK said structural reform can be the answer to the low growth and low inflation.

"The structural reform can improve asset allocation, which in turn increases growth potential and the resilience from any shocks," the central bank said.

The BOK forecast that the economy would grow 1.9 percent in 2025 and 1.8 percent in 2026, while private spending is expected to increase 2 percent in 2025 and 1.8 percent in 2026.

sam@yna.co.kr
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