SEOUL (Reuters) – South Korea’s central bank said the economy would benefit from the end of China’s zero-COVID policy, thanks to strengthened exports and tourism, but added that positive effects from China’s economic recovery would be weaker than in the past.
The late-2022 Chinese policy switch could also push up raw materials prices through increasing demand, the Bank of Korea (BOK) said in a report submitted to parliament on Tuesday.
“China’s economic recovery from reopening is likely to have a positive effect on the (South Korean) domestic economy through improvement in China-bound exports and inflows of tourists,” the BOK said.
But “this time, China’s economic recovery is likely to be centred around consumption, and its positive effect on domestic growth is expected to fall short of that in the past, when China’s economic growth was investment-oriented,” it said.
The BOK also said there was a need to maintain its restrictive policy stance with the focus on price stabilisation, because consumer inflation was likely to stay above the central bank’s target throughout this year.
(Reporting by Jihoon Lee; Editing by Bradley Perrett)