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Standard Chartered Bank said Tuesday that the South Korean economy is likely to
grow 3 percent this year, better than the central bank's forecast, on the back
of the improving global economy.
"The Korean economy is likely to gradually recover this year. The improving global economy would prop up the country's exports and expansionary fiscal and monetary policies would support domestic demand," Oh Suk-tae, a senior economist at the Korean unit of the British banking group, said in a seminar here.
The bank's forecast is slightly more upbeat than the outlook presented by the Bank of Korea (BOK), which cut the nation's 2013 growth forecast on Jan. 11 to 2.8 percent from 3 percent.
On the same day, the BOK froze the key rate at 2.75 percent for the third straight month, but more analysts are betting on a rate cut in the first quarter, citing weaker growth outlook.
"There is a chance that the BOK would slash the interest rate once this year. But Korea will likely focus on expanding fiscal stimulus rather than using the card of a rate cut," Oh added.
BOK Gov. Kim Choong-soo said last week that policy effects are maximized when monetary and fiscal policies go together, spawning speculation that the central bank may cut the rate after gauging the impacts of stimulus packages to be unveiled by the incoming government.