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The Bank of Korea has downgraded South Korea's economic growth outlook for this year from 3 percent to 2.9 percent and slashed job growth prospects. The South Korean finance minister has mentioned the possibility of slowing down the minimum wage raise to help keep the economy afloat.
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Signals that the economy is not doing well can be seen in various sectors. Businesses' facility investment has been on decline for three months in a row since March, resulting in fewer jobs.
The job market has been adding only some 100,000 jobs a month over the past five months. The Bank of Korea has downgraded the nation's economic growth outlook for this year to 2.9 percent. The decision stems from economic uncertainty caused by stagnated growth and the trade war between the United States and China.
[Soundbite] Lee Ju-yeol(Governor, Bank of Korea) : "In fact, we did not expect the trade war to spread this far. But it has been expanding by the day, and nobody knows how things will change in the future."
The Bank of Korea has also projected that this year the job market will expand by a mere 180,000 jobs compared to last year. Back in January, the forecast stood at 300,000 jobs. It was downgraded to 260,000 in April. Finance Minister Kim Dong-yeon has brought up the issue of slowing down the minimum wage increase yet again. He says that the higher minimum wage has affected certain businesses in the wholesale and retail sectors, and undermined employment among middle-aged workers. The Bank of Korea has decided to keep the key rate at 1.5 percent for the eighth consecutive month. Analysts say the decision also stems from the sluggish economy.
