South Korea central bank cuts 2020 GDP outlook, open to more stimulus to fight virus fallout

SEOUL - South Korea’s central bank kept interest rates steady on Thursday, but sharply downgraded its 2020 growth outlook and kept the door open for more monetary stimulus to support an economy hard hit by the coronavirus pandemic.

It said gross domestic product would likely shrink 1.3% in 2020 - the biggest contraction in more than two decades - from a previous forecast for a 0.2% decline. “The negative growth of 1.3% outlook was somewhat shocking, didn’t think would be this drastic,” said Yoon Yeo-sam, an economist at Meritz Securities.

The pandemic pushed South Korea’s export-led economy into its worst recession in over 20 years and analysts worry this could drag into the third quarter as the government considers imposing the highest level of physical distancing.

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