Macroeconomic Forecast South Korea

BMI View GDP growth in 2007 came in at 4.9%, slightly below our 5.0% forecast. We maintain our 5.1% forecast for 2008, but acknowledge considerable downside risks as South Korean exports are likely to be affected by a weaker global economy. Tax cuts and other pro-business government policies could give a boost to private consumption and investment, but the latter should also be affected by deteriorating global conditions. In addition, rising inflation will keep the Bank of Korea (BoK) on alert and diminishes the prospect of monetary easing.

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