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Macroeconomic developments and policies affecting monetary conditions - OECD Economic Surveys: Korea 2007

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  • Macroeconomic developments and policies affecting monetary conditions - OECD Economic Surveys: Korea 2007
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  • Organization for Economic Cooperation and Development (OECD)


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Title Macroeconomic developments and policies affecting monetary conditions - OECD Economic Surveys: Korea 2007
Similar Titles
Material Type Others
Author(English)

OECD

Publisher

Organization for Economic Cooperation and Development (OECD)

Date 2007
Language English
File Type Link
Subject Economy < Macroeconomics

Abstract

Economic growth slowed to less than a 4% annual rate in the second half of 2006, largely due to weak private consumption and a decline in housing construction. The economy is projected to pick up gradually, with growth of about 4¼ per cent in 2007. Korea should pursue a flexible exchange rate policy by limiting intervention in foreign exchange markets. The liberalisation of controls on capital outflows should aim at improving long-run efficiency rather than moderating upward pressure on the won in the short run. The Bank of Korea should focus on achieving its new medium-term target for overall CPI inflation and avoid using monetary policy as a tool to stabilise real estate prices in some parts of the capital region, as further hikes in the short-term interest rate would have a negative impact on the increasingly indebted household and small and medium-sized enterprise sectors.