BOK likely to cut South Korea's 2014 growth estimate

South Korea's central bank is expected to lower its 2014 forecast of the country's economic growth this week amid growing signs of the world economy's slowdown, experts said Sunday. After a monthly rate-setting meeting on Thursday, the Bank of Korea (BOK) could cut next year's growth prospect for South Korea to between 3.8 percent and 3.9 percent, citing a possible move by the International Monetary Fund (IMF) to slash its growth forecast for the world economy in 2014, they said. In July, the BOK revised up the country's 2014 growth to 4 percent from its 3.8 percent estimate made in April. A slowdown of the world economy could have an immediate impact on Asia's fourth-largest economy as it would deal a blow to the country's exports, which account for around 50 percent of South Korea's gross domestic product. The IMF could revise down its next year's growth outlook for South Korea, from its previous estimate of 3.9 percent, experts said. Yum Sang-hoon, an analyst at SK Securities in Seoul, said the BOK could lower South Korea's economic growth rate to 3.8 percent in 2014, noting the Asia Development Bank has recently revised down its next year's growth outlook for South Korea to 3.5 percent, from its previous estimate of 3.7 percent. Jean Lim, a research fellow at the Korea Institute of Finance, also said South Korea is unlikely to maintain its forecast of 4 percent growth, citing a possible slowdown of South Korea's exports. The experts, meanwhile, said the BOK could leave the benchmark 7-day repo rate unchanged at 2.5 percent in a meeting slated for Thursday. In September, the seven-member policy committee of the BOK unanimously decided to freeze the key interest rate at 2.5 percent for the fourth straight month. Lee Jun-hyup, a research fellow at Hyundai Research Institute (HRI), said the BOK appears unlikely to change its monetary policy until uncertainties are cleared, in an apparent reference to the U.S. Federal Reserve's recent decision to keep its current bond-purchasing program in place. In a report released on Sunday, the HRI forecast the South Korean economy will likely expand at an annual rate of 3.8 percent next year thanks mainly to a quick recovery in overseas demand. "Despite a feeble rebound in domestic demand, South Korean exports are likely to pick up rapidly on the back of a gradual recovery in the United States and other advanced economies," the think tank said. The U.S. economy is projected to grow in the upper 2 percent range next year, with global trade forecast to expand 5.4 percent. South Korea's overseas shipments are thus likely to increase 8.4 percent next year from 2013, with its current account surplus forecast to reach US$49 billion in the coming year, the think tank said. The HRI, meanwhile, retained its 2013 growth estimate for the South Korean economy at 2.6 percent as predicted in June this year.