South Korea central bank cuts growth forecast, citing drought and MERS oubtreak

Economic Indicators Associated Press

South Korea's central bank cut its economic growth forecast, citing a severe drought and the spread of Middle East respiratory syndrome.

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Bank of Korea governor Lee Ju-yeol said Thursday that South Korea's economy will likely expand 2.8 percent this year, down from 3.1 percent forecast in April.

Lee said a recovery in the current quarter depends on whether foreign tourism bounces back from the MERS outbreak.

The finance ministry last month cut its growth forecast because the MERS outbreak sapped consumption and hit tourism. Hundreds of thousands of foreign visitors from China cancelled visits to South Korea since the outbreak of the disease in May.

Lee said domestic consumption is expected to recover as the MERS outbreak is contained.