Roundup: S.Korea cuts interest rate to all-time low of 0.50 pct over COVID-19

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SEOUL, May 28 (Xinhua) -- South Korea's central bank on Thursday cut its benchmark interest rate to a new record low of 0.50 percent to tackle an economic fallout from the COVID-19 outbreak across the world.

Bank of Korea (BOK) Governor Lee Ju-yeol and other monetary policy board members decided to slash the seven-day repurchase rate by 25 basis points to an all-time low of 0.50 percent.

The BOK lowered the key rate by 50 basis points in March in its first emergency move since the 2008 global financial crisis.

The rate cut decision was not in line with market expectations. According to a Korea Financial Investment Association (KFIA) survey of 200 fixed-income experts, 79 percent predicted a rate on hold.

The BOK said in a statement that the global economy has contracted significantly due to a constrained economic activity caused by the COVID-19 pandemic, noting that economic growth in South Korea has slowed considerably.

The bank forecast that the domestic economic growth will remain sluggish for some time due to the impact of the COVID-19, adding that uncertainties around the future path of gross domestic product (GDP) growth are judged to be very high.

Downside risks to the South Korea economy increased in recent months as the coronavirus pandemic roiled global trade and domestic demand.

Export, which accounts for about half of the export-driven economy, plummeted 24.3 percent in April from a year earlier due to a negative effect from the coronavirus pandemic and cheaper crude oil.

Private consumption weakened as people refrained from outside activity such as shopping, traveling and eating out amid lingering worry about the COVID-19.

Credit card spending reduced 5.7 percent in April from a year earlier after sliding 4.3 percent in the previous month. It was the first time since May 2004 that the spending fell for two straight months.

Revenue for department stores retreated 14.7 percent in April, after tumbling 34.6 percent in March and 30.6 percent in February respectively. The revenue continued to fall for the fifth consecutive month.

The discount outlet revenue dipped 0.9 percent last month, but it was slower than the declines of 13.8 percent in March and 19.6 percent in February each.

The number of Chinese travelers to South Korea plunged 99.1 percent in April from a year ago, marking the biggest fall since data began to be compiled in January 1999.

Revenue by online retailers advanced 19.9 percent in April, after expanding 23.6 percent in the previous month.

Passenger car sale in the domestic market grew 11.6 percent last month, keeping an upward trend for the second consecutive month owing to a temporary tax cut for vehicle purchase.

Sentiment among South Korean consumers over economic situations rebounded in May as the government offered relief grans to all households to help boost consumer spending.

The business sentiment index also added 2 points to 53 in May, but it remained at a level near the one recorded during the 2008 global financial crisis.

The number of those employed plunged 476,000 in April from a year earlier, posting the biggest reduction in over 21 years.

Companies encouraged employees to go on an unpaid leave, laying off especially irregular workers amid growing economic uncertainty from the COVID-19 outbreak.

Production in all industries slipped 0.3 percent in March from a month ago. Output in the mining and manufacturing industry grew 4.6 percent, but production in the services sector declined 4.4 percent in the month. Enditem

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