Bank of Korea's Monetary Policy Department's Director General Lee Ju-yeol said that the year 2005 was a rather difficult year for the South Korean economy. In the first quarter, GDP growth rate moderated to 3%, but in the latter half of last year economic growth gained momentum on the back of improvement in private consumption. The major macro-economic indicators, such as prices and the current account, continued to remain favourable.
In 2006, the domestic economy is expected to show strong signs of recovery, even though uncertainties remain over high oil prices and the Won's appreciation. GDP is projected to grow at 5% year-over-year in 2006 on the back of the expected exports growth combined with the recovery of consumption. Therefore, the imbalance between domestic and external demand is expected to ease considerably and popular perceptions of the strength of business activity will be increased by improvement in terms of trade. BOK expects Consumer Price Index to increase 3% in 2006 and core inflation by 2.7%.