Korea should be watchful of uncertainties: experts

Korea should be alert against economic uncertainties at home and abroad, such as the eurozone debt crisis and household debt, as they will serve as downside risks to the growth path, experts said.

The Korean economy has maintained its upward momentum, aided by sustained exports, but its growth path is fraught with a set of economic uncertainties, which warrant a close watch, experts said in a monthly meeting with Bank of Korea Gov. Kim Choong-soo.

The meeting came after the BOK unexpectedly froze its key interest rate at 3 percent for the second straight month in May in the face of growing economic uncertainty.

Global financial markets have been gripped by renewed concerns about the eurozone sovereign crisis amid speculation that Greece may face debt restructuring.

Experts also cast a warning against inflation risks, saying that policymakers should make efforts to prevent the impacts of supply shocks from raising inflation expectations. They noted that there is a possibility that the pace of wage growth is likely to accelerate in the second half.

Gains in oil and commodity prices and sustained economic growth are exerting upward pressure on inflation. The BOK has guarded against growing inflation expectations as the spillover effect of cost-push inflation could bring in a spiral of wage increases, adding to price pressure.

Consumer prices rose 4.2 percent in April from a year earlier, slowing from a 4.7 percent expansion in March. But consumer inflation surpassed the upper ceiling of the BOK’s 2-4 percent inflation target band for the fourth straight month. 

(Yonhap News)