Lee Chang-yong, Governor of the Bank of Korea, noted that the budget reduction bill, which passed the National Assembly led by the opposition party, could potentially lower next year's economic growth rate by 0.06 percentage points. The Bank of Korea presented a revised economic forecast on the 28th of last month, projecting Korea's economic growth rate at 1.9% for next year. This suggests that the current fiscal expenditure plan could justify a downward adjustment of the growth forecast to 1.8%.
During the current issue inquiry at the National Assembly's Planning and Finance Committee on the 17th, Governor Lee responded to Rep. Park Hong-geun of the Democratic Party of Korea's question about 'the impact of the budget bill passed by the National Assembly on economic growth' by stating, "The currently passed budget bill has about a negative 0.06 percentage point impact on economic (growth rate)."
He added, "I think the current situation with downward risks provides grounds to make a little more use of fiscal resources."
When asked whether Korea's potential growth rate forecast, which is scheduled to be announced soon, would fall below 2%, Governor Lee avoided answering by saying, "It is difficult to speak before the announcement."
On the possibility of convening an interim Monetary Policy Committee this month to further lower the base interest rate, Governor Lee drew a line by stating, "It is not under consideration." Regarding the possibility of a rate cut next month, he responded, "We will decide after observing economic indicators."
Regarding the possibility of a foreign exchange crisis due to capital outflow after the state of emergency, Governor Lee said, "A foreign exchange crisis is when we cannot repay foreign debt," and added, "Currently, our country is a creditor nation in terms of foreign exchange, and there is no issue with the functioning of the foreign exchange market." He further mentioned, "Concerns about a foreign exchange crisis are excessively high."
To the same question, Choi Sang-mok, Deputy Prime Minister and Minister of Strategy and Finance, also responded, "Our country's foreign exchange reserves rank 9th in the world," and added, "International organizations such as the International Monetary Fund (IMF) evaluate that this is sufficient to respond to the foreign exchange market."
Regarding the impact of political uncertainty on the economy from the state of emergency to the impeachment situation, Governor Lee answered, "If economic policy is maintained separately from politics, the impact will be limited," but also added, "However, as the external environment is different from before, we must be mindful of changes in the external environment, which is the message of us (the Bank of Korea)."