South Korea’s finance minister nominee says economy below potential growth level

SEOUL (Reuters) – South Korea’s finance minister nominee said the country’s months-long property boom is cooling down and economy is below its full potential, signaling to markets that monetary tightening is not urgent for now.

“(The economy) is below full its potential growth rate but it’s premature to say it’s in crisis or recession,” Hong Nam-ki said in remarks to reporters on Friday that were emabargoed until Sunday.

Hong, who was appointed by the presidential office earlier on Friday, should get approval of the parliament before taking office though the approval is not mandatory.

Hong’s remarks contrast slightly with the Bank of Korea’s view, which holds that the economy is “roughly around” the its full potential growth level, and has left the door open for a policy rate hike at its Nov. 30 monetary meeting.

The economy expanded an annual 2.0 percent in July-September, far slower than the second quarter’s 2.8 percent and missing the poll estimate of 2.2 percent mainly due to the above-trend expansion seen in the comparable period last year.

Hong noted that overheated housing prices, a long-standing headache for the administration, had “stabilized somewhat”.

The central bank BOK said in a report submitted to the parliament on Thursday that it saw a case for monetary policy tightening to curb rapid growth in consumer and corporate borrowing.

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