[SEOUL] South Korea must press ahead with ongoing structural reforms, backed by monetary and fiscal policies to stabilise the economy in order to overcome external risks, the central bank's monetary policy board said on Thursday.
The comments from the Bank of Korea board come amid market speculation that the government will announce a supplementary budget as early as next week to boost economic activity.
Policy board member Hahm Joon Ho said uncertainties over the US and Chinese economies raised concerns that South Korea's export focused economy could slow too fast unless appropriate actions were taken.
"In this current situation where we are facing turbulence from G2 countries, in order to avert a hard landing we must push forward with structural reform," Mr Hahm said, while representing the board, in opening remarks at an event in Seoul.
"It is essential we have monetary, fiscal policies to stabilise the economy to back that reform, as well as the right macroprudential policy mix to prevent fallout from those policies like household debt risks."
In a surprise move earlier this month, the Bank of Korea lowered interest rates by 25 basis points to a record-low 1.25 per cent.
The board had explained the move was to offset weak exports and complement an overhaul of the country's shipping and shipbuilding industries.
Aside the these two industries, South Korean policymakers are monitoring other sectors hit by a global economic slowdown but no additional measures are being planned yet.