Published:
Korea proposes W8.5 trillion to stimulate fiscal spending
Should Korea make a move to cut interest rates too?
According to Morgan Stanley, Korea's GDP growth decelerated to 2.8% in 1Q12 (vs. 3.3% in 4Q11), the lowest point since 3Q09. The growth in 2Q12 could decelerate further due to the sluggish domestic demand and weak exports.
"The government proposed the W8.5 trillion supplementary budget for 2H12 as stimulus spending on fiscal side. On the monetary side, we think it is time for the BoK to act. Cutting the interest rate is the easiest way to 1) support the business confidence in an uncertain economic environment, and 2) alleviate the interest payment burdens for households," it says.
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