Wed, 06 Dec 2023

SEOUL, June 8 (Xinhua) -- South Korea's central bank on Thursday warned of growing economic uncertainties such as the remaining inflationary pressure, the domestic economic slump and the faltering real estate market.

The Bank of Korea (BOK) said in its monetary and credit policy report submitted to the National Assembly that the pace of slowdown in core inflation was considerably slower than in the past, although the headline inflation gradually slowed down.

The country's consumer prices rose 3.3 percent in May from a year earlier, marking the lowest increase in 19 months since October 2021.

The headline inflation continued to slow down this year from 5.2 percent in January to 4.8 percent in February, 4.2 percent in March and 3.7 percent in April.

Core consumer prices, which exclude volatile agricultural and oil products, jumped 4.3 percent in May, far surpassing the headline inflation of 3.3 percent.

The BOK said the rigidity of the core inflation was attributable to the second-round effect of the accumulated cost-raising factors, including higher energy prices, warning that concerns were raised over the consumer price inflation exceeding the central bank's mid-term target of 2 percent for a considerable period of time.

Regarding the economic downturn, the BOK said the sluggish export continued on the back of lower price and weaker demand for locally-made semiconductors, a major export item of the East Asian economy.

The country's outbound shipment tumbled 15.2 percent in May from a year earlier, keeping a downward trend for the eighth straight month. It led to trade deficits for 15 months in a row.

Semiconductor export plunged 36.2 percent last month, continuing to slide for the 10th successive month.

The BOK said the housing market was forecast to face downward pressure for the time being amid the high interest rates and the unstable home lease market, adding that the commercial real estate market continued to be sluggish owing to the sharp gain in the delinquency ratio of relevant loans by non-banking financial institutions.

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