Goldman Sachs, a leading global investment banking group, said on June 18 it is cutting South Korea’s growth forecast for this year and next.
The slash is based on the prospect of a smaller-than-expected rebound in the second-quarter GDP growth and a prolonged elevation in trade tensions this year, it said.
The group added it expects the Bank of Korea to cut interest rate twice over the coming year by 25 basis points each. It cited escalation in US-China trade tensions and a delayed recovery in memory chip markets, as well as the recent dovish stance of BOK officials for possible rate cuts.
“The BOK’s easing is likely to be back-loaded and slower than priced in the markets, as seen in late 2012 and early 2013, with the first cut taking place in the fourth quarter and the second quarter in mid-2020,” the company said.
The New York-based banking group said that if the US Fed sounds less dovish than expected by markets in upcoming Federal Open Market Committee meeting in June and July, Korean markets would be among the most vulnerable in the region to US rate corrections.
By Park Ga-young (firstname.lastname@example.org)