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South Korea fin min says downside risks to economy bigger than expected

[SEOUL] South Korea's finance minister said downside risks to the local economy were bigger than he expected as domestic consumption continued to limp and offshore risks persisted.

"Our economy has been showing signs of recovery after mid-February as production, exports and sentiment improved," finance minister Yoo Il Ho said in a speech to provincial governors and officials on Tuesday.

"However, we still have a long way to go. Domestic consumption including capital investment is continuing to slow while offshore, we are seeing global sluggishness persist like in China, resulting in bigger downside risks than we expected."

The finance minister added the recent GDP forecast downgrades by the International Monetary Fund (IMF) and the Bank of Korea reflected these downside risks.

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The Bank of Korea lowered its GDP forecast for this year to 2.8 per cent from 3.0 per cent, while the IMF downgraded its projection to 2.7 per cent from 2.9 per cent last week.

Mr Yoo said there was no choice except to bolster the strength of the economy by persistently pressing for structural reform.