Lee Chang-yong ‘China’s growth rate fluctuates by half in Korea, 1.8% good excluding IT’
Bank of Korea Governor Lee Chang-yong said at a press conference on the decision to freeze interest rates that China's growth rate in Korea fluctuated from 1.1% to 0.5%.
Governor Lee said, “The growth rate is 1.1% in the scenario where China’s economic recovery is delayed and financial instability in developed countries increases, and the growth rate is 1.6% in the scenario where China’s growth engines are strengthened.” It announced on the 25th that it would freeze the interest rate with '1.8% growth excluding IT' in the structure of 'the Chinese economy fluctuates by 0.5%, which is half of the growth rate of the Korean economy'.
On this day, the United States and China continued discussions on “limiting foreign investment in semiconductors and export control” at a meeting of the Commerce Ministers held in Washington.
"It is not yet clear whether the Fed's interest rate is high enough to slow borrowing, spending and inflation," said Christopher Waller, director of the Fed, at a meeting in May. "Whether we should raise rates or skip them at our June meeting depends on how the data come out over the next four weeks," the Associated Press reported.
Regarding IT, Korea's main export product, Governor Lee said, "Except for information technology (IT), the economic growth rate remains at 1.8%," adding, "The 1.4% growth rate is not pessimistic." He revealed his preference for relying on the US for the Korean economic system that excludes China and IT at the same time for the structure of the trade deficit.
Fed Chair Powell said at a news conference after the rate hike on Thursday that there had been discussions about forgoing rate hikes at future meetings, but did not say how many officials preferred doing so.
According to the FOMC meeting minutes released on the 25th, "some" officials want to make it clear that the signal that the Fed will stop raising rates in June "should not be interpreted as a signal that the central bank will soon cut rates." The AP reported on the 25th.
Regarding US interest rates, “The prospect that the US Federal Reserve will no longer step on the tightening pedal is gaining momentum after the ‘baby step (a 0.25%p increase in the base rate)’ on the 3rd. The analysis is that the May hike is in fact the last rate hike,” Maeil Business News reported on the 4th.
Most of the Korean media reported that the U.S. kept interest rates unchanged in May and the interest rate declined from June.
"Inflation is still too high and we haven't made much progress toward the Fed's target of 2 percent," said Christopher Waller, the Fed's director, on the 3rd. ” he wrote in the minutes of the meeting.
Deputy Prime Minister Choo Kyung-ho said in an answer to the National Assembly, "The trade deficit was the smallest in April, but it will not be good in May due to the base effect of last year." You will be able to check the external performance of the figure," he said on the 21st.
Exports from May 1 to 20 were $32.443 billion, down 16.1% from the same period last year, and the trade deficit was $4.34 billion.
On the 25th, the Bank of Korea revised the economic growth rate to 1.4%, a 0.2%p decrease from the 1.6% announced in February, as a 'revised economic outlook'. If it strengthens, it is estimated at 1.6%, and the 0.5% fluctuation came from the Chinese economy.
In a press conference, Governor Lee said, "Excluding the information technology (IT) sector, the economic growth rate will be maintained at 1.8%," adding, "The 1.4% growth rate is not pessimistic."
On the same day, Governor Lee revealed the structure of a slight increase of 0.4% in exports of goods in the economic downturn of -3.2% and -0.4% in construction investment, a decline in equipment investment that exceeded the 2.3% increase in private consumption this year, and a trade deficit system caused by a sharp increase in semiconductor inventory and a sharp decline in exports. As an alternative, he said, “structural reforms including labor, pension, and education are needed.”
Governor Lee continued, “The problem is that even though we know we need to reform, social compromise between stakeholders is difficult and progress is not going.”
As for the reform plan, President Lee announced restructuring to overcome the ban on overseas exports of services and medical care, which are highly competitive industries, in addressing the rigidity of discussions on students' free search for college majors, pension reform, and the use of overseas workers.